Washington, D.C. — This afternoon, Judge Kelly Hodge from the U.S. District Court for the Eastern District of Pennsylvania denied a motion for a preliminary injunction against the Federal Trade Commission’s rule banning noncompete clauses in the case ATS Tree Services, LLC v. FTC. In response to this ruling in the FTC’s favor, the American Economic Liberties Project released the following statement.

“Judge Hodge’s decision is a major victory for workers across the economy,” said Elizabeth Wilkins, Senior Fellow at the American Economic Liberties Project. “This ruling reinforces the FTC’s mandate to protect workers and promote fair competition, finding the immensely popular noncompete ban firmly within the agency’s statutory authority. Amid other baseless legal challenges to the FTC’s rulemaking authority, today’s victory clears a crucial hurdle for the rule’s enforcement — which will bring needed relief to over 30 million Americans.”

In the case of ATS Tree Services, LLC v. FTC, ATS challenged the Federal Trade Commission’s rule banning most non-compete clauses, arguing that the FTC exceeded its statutory authority and violated the U.S. Constitution. ATS claimed that enforcing this rule would irreparably harm its business by undermining its ability to protect investments in employee training and prevent the loss of business secrets. However, the court denied ATS’s motion for a preliminary injunction, finding that ATS did not demonstrate immediate and irreparable harm. The court upheld the FTC’s authority to issue the rule, highlighting that the compliance costs were minimal and speculative risks of losing employees were insufficient to justify halting the rule’s enforcement.

In a similar case in the Northern District of Texas, a rogue judge recently issued a preliminary injunction on parts of the rule, with a final ruling in that case expected on August 30th.

The rule is expected to go into effect September 4, 2024.

Learn more about Economic Liberties here. 

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.