FOLLOW US

The Federal Trade Commission has received backing against a challenge of its new rule banning noncompete clauses, with a labor group, local lawmakers and others urging a Texas federal court not to prevent the rule from taking effect in September. Supporters of the rule filed several amicus briefs Friday pushing back against a bid to stay the effective date and a bid for a preliminary injunction to prevent the rule's enforcement lodged by tax preparation company Ryan LLC and the U.S. Chamber of Commerce. The Texas AFL-CIO, a state labor federation with 240,000 affiliated members, argued in its brief that the union group supports a speedy implementation of the rule because of the damaging effects that noncompete provisions have on Texas workers and because noncompetes undermine "the fundamental right to pursue a vocation of one's choosing." "Working people rarely, if ever, have an opportunity to negotiate over the non-compete provisions in their employment contracts," the Texas AFL-CIO said Friday. "But these provisions strip them of the right to seek work where they would receive higher pay and better treatment and impede their professional growth and ability to channel their entrepreneurial spirit for the benefit of all of us." By limiting economic freedom, the union group added, "non-competes leave hard-working Americans at the mercy of abusive employers, low wages, and poor working conditions." An attorney for the Texas AFL-CIO, Nina DiSalvo of Towards Justice, told Law360 on Monday that powerful corporations should not be allowed to trample basic freedoms or to sidestep "a free and fair labor market." "The Texas AFL-CIO brings ordinary people's voices to a complex litigation and reminds us that the issues at play here are actually very simple: the freedom of working people to pursue their careers, serve their clients, and start new businesses," DiSalvo said. A group of 12 current and former local elected officials from Texas said in a brief on Friday that the FTC's "extensive analysis" shows that noncompete clauses undermine small-business creation, innovation, healthcare and wages. "They do so despite less socially harmful means of protecting employers' legitimate interests, such as nondisclosure agreements and trade-secret protections," the group said. "The FTC's decision to adopt its rule was far from arbitrary or capricious — rather, it was a sensible response to a widespread practice." 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.