Earlier this year, the Biden administration announced that it would ban companies from requiring employees to sign noncompete agreements.

Yet in major defeat, that prohibition was struck down earlier this week by a Trump-appointed federal judge. 

Judge says FTC exceeded its authority

According to the Daily Caller, U.S. District Court Judge Ada Brown for the Northern District of Texas ruled on Tuesday that the Federal Trade Commission (FTC) had exceeded its authority.

In her decision, Brown took issue with the FTC's choice to impose a blanket ban rather than going after "specific, harmful" examples of noncompete agreements.

"The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition — that prohibits entering or enforcing virtually all non-competes — instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious," Brown wrote.

The judge further pointed out how "[t]he role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do."

FTC is "seriously considering a potential appeal"

An FTC spokeswoman told the Daily Caller News, "We are disappointed by Judge Brown’s decision and will keep fighting to stop noncompetes that restrict the economic liberty of hardworking Americans, hamper economic growth, limit innovation, and depress wages."

"We are seriously considering a potential appeal, and today’s decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions," the spokesperson added. 

Those words echo a statement defending the Biden administration's opposition to noncompete clauses that was released in April by FTC Chair Lina Khan.

"Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned," Khan insisted.

"The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market," she declared.

Plaintiff welcomes ruling

However, Brown's ruling came as welcome news to tax services and software company Ryan LLC, which challenged the noncompete ban with assistance from the Chamber of Commerce and other groups.

As the Wall Street Journal reported, it maintains that prohibiting noncompete clauses creates a disincentive for companies to provide workers with training and skill development.

Brint Ryan serves as Ryan LLC's chief executive, and he told the Journal, "The continuing overreach and overregulation from the federal government jeopardizes America’s economic liberty and diminishes the opportunity our country provides for all of us."