The Federal Trade Commission prohibits non-competes. The business lobby is not happy.

Business groups representing employers are unhappy with the Federal Trade Commission’s new ban on non-compete agreements and have already gone to court to block it.

The US Chamber of Commerce, joined by the Business Roundtable and the Texas Business Association, filed a court trial Wednesday in federal court in Texas, arguing that the FTC exceeded its statutory authority in issuing the rule. The commission that enforces antitrust legislation, finalizes the historic new ordinance on a 3-2 vote the previous day.

Non-compete agreements prohibit workers from taking jobs at competing businesses for a specified period of time, effectively locking workers into their current positions. It makes perfect sense that business groups are upset with the FTC; banning noncompetes would shift more bargaining power to workers, forcing employers to improve wages and working conditions or risk losing talent to their competitors.

The FTC said the rule will take effect 120 days after it appears in the Federal Register. The chamber can ask a judge to issue an order to stay the non-compete rule from going into effect while the case is pending.

Conservative groups often choose to take their challenges to progressive federal policies in Texas, where they are more likely to find a judge who shares their distaste for the regulatory state — a legal practice called “forum shopping.” The chamber filed its case in the Eastern District of Texas, which falls under the U.S. Court of Appeals for the 5th Circuit, considered rightmost of the federal districts and place where regulations die.

Many legal observers expect the case to eventually reach the U.S. Supreme Court, where the conservative 6-3 majority tends to side with business in controversial rulings.

The FTC insisted it was on solid ground in issuing the rule. Lina Khan, the committee’s chairwoman, said in an interview with CNN on Wednesday that “we have clear statutory powers” to prohibit agreements.

Scholars, policymakers and politicians, including President Joe Biden, have attacked non-compete agreements for years for the way they force workers to stay in menial, low-paying jobs instead of moving on to better ones. The FTC says they also stifle innovation by preventing people from starting their own businesses.

The committee’s rule would render existing non-compete waivers unenforceable (except for those that apply to senior executives, who are less likely to be forced to sign them) and prohibit employers from entering into new ones.

When the ban was first proposed last year, it proved popular with Americans. An Ipsos poll at the time showed that 3 out of 5 respondents supported such a regulation, including 66% of working people.

Given the public approval for such a ban, it’s not surprising that many detractors objected to the FTC’s move mostly on procedural grounds rather than defending the use of the agreements themselves. Republican Andrew Ferguson, one of two FTC commissioners who voted against the rule, said he was “sympathetic” to the ban’s goals but maintained the agency was encroaching on congressional authority.

On Wednesday court trial, the chamber also argued that noncompetes are legal and necessary, arguing that employers must protect the time and money they invest in employee training. Banning the contracts would create “burdens” that are “immediate and significant,” the lobby group said.

“Companies will face significant legal costs as they are forced to resort to other tools to try to protect their investments,” it said. “And the economy as a whole will suffer because startups and small businesses are unable to prevent dominant firms from hiring their best employees and gaining access to their confidential information.”

The Student Creditor Advocacy Center, a nonprofit advocacy group that supported the ban, said the House and other groups went to Texas for a reason: They were looking “to right-wing judges” to curry favor with them. political outcome.

“In a democracy, the courts should not be the primary policymakers — but the House knows this federal judiciary is eager to block policies that value people over corporate profits,” the advocacy group said in a statement.