Friday, August 23, 2024 American Hotel & Lodging Association (AHLA) Interim President & CEO Kevin Carey issued the following statement after a federal judge in Texas halted the Federal Trade Commission (FTC) from enforcing a rule prohibiting noncompete agreements. “The FTC overstepped its authority by approving a rule that allows federal interference in multitudes of business agreements across the country. In doing so, the FTC set a dangerous precedent for intruding into an area that has been regulated by the states throughout our nation’s history,” said AHLA Interim President & CEO Kevin Carey .
“We applaud the judge’s decision and will continue to support efforts to overturn the FTC’s unjustified and overly broad rule.” On April 23, 2024, the Federal Trade Commission (FTC) issued a final rule banning noncompete agreements, with the rule set to take effect on September 4, 2024. The following day, April 24, 2024, a coalition of industry groups filed a legal challenge against the rule in the U.
S. District Court for the Eastern District of Texas. The lawsuit argued that the FTC exceeded its authority and sought to prohibit a practice traditionally regulated by state law.
In May 2024, the American Hotel & Lodging Association (AHLA) and other business groups filed an amicus brief supporting the lawsuit. The brief contended that the FTC’s rule disregards over 200 years of state jurisdiction over noncompete agreements, disrupts companies’ contractual relationships with their employees, and complicates the protection of legitimate business interests. On August 20, 2024, Judge Ada Brown ruled against the FTC’s rule, effectively preventing its enforcement unless the FTC decides to appeal the decision.
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