ATS Tree Service v. FTC

In April 2024, the Federal Trade Commission (FTC) found that noncompete clauses in employment contracts are unfair methods of competition and, therefore, issued a rule restricting use of noncompete clauses. A company called ATS Tree Service filed suit challenging the rule on several grounds. It then moved to stay the rule’s September 2024 effective date and to preliminarily enjoin the enforcement of the rule.

Public Citizen, joined by National Employment Law Project, filed an amicus brief in support of the FTC. Our amicus brief explains that the rule has a strong basis in the record, which shows that noncompete provisions lower wages and reduce job mobility, and are often imposed on workers without meaningful consent. For low-wage workers, who often lack bargaining power and access to legal resources, the consequences of a noncompete provision can impose particular hardship. The brief also explains that the FTC Act provides statutory authority for the Rule.

In a decision issued in July 2024, the district court denied the motion for a preliminary injunction, finding, among other things, that ATS was unlikely to prevail on its claim that the FTC lacks statutory authority. In October 2024, the plaintiff voluntarily dismissed the case.

Public Citizen and NELP also filed amicus briefs in similar cases in Texas and Florida.