Chamber of Commerce Sues FTC to Block Non-Compete Ban, Challenging Agency Authority

The U.S. Chamber of Commerce, joined by the Business Roundtable, the Texas Association of Business, and the Longview Chamber of Commerce, filed a lawsuit in Tyler, Texas federal court against the FTC and Chair Lina Khan over the commission’s vote to ban noncompete clauses used to block employees from working for competitors. The lawsuit also filed a motion for a stay and preliminary injunction to prevent enforcement of the rule. The FTC had first proposed the non-compete ban in January 2023, arguing the restrictions unfairly block workers from switching jobs and undermine labor competition. The final vote in April 2024 fell along partisan lines with the FTC’s three Democrats in favor and Republicans opposed. The Chamber argued that ‘The sheer economic and political significance of a nationwide noncompete ban demonstrates that this is a question for Congress to decide, rather than an agency.’ The lawsuit represented an escalation of corporate America’s campaign against the Khan FTC, moving beyond transparency complaints to direct challenges to the agency’s substantive rulemaking authority. The litigation strategy aimed to invoke the Supreme Court’s ‘major questions doctrine’—a recently weaponized framework conservative judges use to strike down significant agency actions without clear congressional authorization. The case reflected a fundamental tension: the FTC was using its congressionally granted authority to address labor market dysfunction, while corporate lobbies claimed only Congress could authorize such action, knowing Congress was gridlocked and incapable of updating regulations.