A federal judge in Texas has struck down the U.S. government's nationwide ban on noncompete agreements, which was set to take effect on September 4. The ruling, delivered by Judge Ada Brown, concluded that the Federal Trade Commission (FTC) overstepped its authority, stating that Congress had not granted the FTC the power to impose such a broad ban. This decision means that employers, including home health care providers, can continue using noncompete agreements as permitted by state laws.

• Related: FTC Proposes Rule to Ban Non-Compete Clauses

Noncompete agreements, which prevent employees from joining competitors or starting similar businesses, impact approximately 30 million American workers. The FTC has long argued that these agreements harm workers by limiting job mobility and suppressing wages. The agency had estimated that the proposed ban could lead to significant wage increases and the creation of thousands of new businesses. Under the proposed rule, existing noncompete agreements would not have to be formally rescinded, but employers would be required to inform their employees that such agreements were no longer enforceable.

Despite the ruling, the FTC may appeal the decision and has indicated it will continue to address noncompetes through individual enforcement actions.

HCAF will closely monitor the situation as the FTC considers appealing the court's decision.