At least two federal lawsuits filed in Texas aim to block a recent decision to ban noncompete clauses in workers' contracts, according to an employment attorney based in Austin.
AUSTIN (KXAN) — At least two federal lawsuits filed in Texas aim to block a recent decision to ban noncompete clauses in workers' contracts, according to an employment attorney based in Austin.
Austin Kaplan, who's the founder and managing attorney at the Kaplan Law Firm, said these legal challenges are why he's warning people who might think such an agreement no longer applies to them.
"If you signed a noncompete, you must take it seriously and assume you are still bound by it," Kaplan said Wednesday. "My recommendation is to talk to an attorney, ideally, before you change jobs, especially if you're going to be within what the noncompete tries to restrict you from doing. I don't think the [Federal Trade Commission's] action is going to make a difference for anyone today."
By a vote of 3-2 Tuesday, the Federal Trade Commission (FTC) advanced a rule that would ban new noncompete agreements and require companies to inform workers they won't enforce them anymore. According to the FTC, noncompete clauses cover 18 percent of the U.S. workforce, which is an estimated 30 million people.
The original proposal changed slightly in the final vote, though, leaving these agreements in effect still for senior executives at companies.
The new rule should take effect in 120 days, but legal challenges will almost certainly alter that timeline.
The U.S. Chamber of Commerce is one of the plaintiffs in a lawsuit filed against the FTC in the U.S. District Court for the Eastern District of Texas. The other plaintiffs include the Business Roundtable, the Texas Association of Business and the Longview Chamber of Commerce.
They're accusing the FTC of regulatory overreach and claiming noncompete agreements are necessary to protect intellectual property.
Kaplan said he's hoping the legal pushback won't succeed and that the FTC will be able to eventually implement this rule change.
"My hope is that the FTC will prevail, and we will have a nationwide standard that does not permit noncompetes to continue," Kaplan said, "because I think that they were abused and overused and I think they harm workers' rights. But it's up to the courts to decide how this is going to play out. The main issue is whether or not the FTC, that federal agency, has the authority and ability to take this action."
