An attorney for the elected officials, Darren P. Nicholson of Burns Charest LLP, told Law360 on Monday that the widespread misuse of noncompete agreements is bad for business, workers and for Texas.
“The FTC’s rule banning the practice levels the playing field for employees and employers alike, and opens the door for thousands of small businesses,” Nicholson said. “This rule makes the Texas economy stronger, and we were glad to partner with Public Rights Project and local officials across the state to urge the court to uphold it.”
The FTC voted 3-2 along party lines to implement the new rule on April 23, deeming the use of noncompete clauses in employment contracts an unfair method of competition and thus unenforceable. Set to take effect in September, the rule bars noncompetes moving forward, and requires employers to tell current and former employees that existing agreements are no longer enforceable.
It includes a carveout for existing noncompetes covering senior executives, but the use of the clauses for those employees will be banned going forward.
