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A recent federal court ruling added more uncertainty to the Federal Trade Commision's (FTC's) ban on non-competition agreements, which was set to go into effect in September. The end result of this ruling will have a significant effect on the ability to utilize the fair market value of non-competition agreements as part of Internal Revenue Code Section 280G calculations for golden parachute payments.
A federal judge last week backed a challenge to a nationwide ban on the pacts, which restrict workers' ability to join rival firms. The ruling came days after the Supreme Court gave judges more latitude to challenge federal agencies' rule-making authority. The Federal Trade Commission's ban was set to go into effect in September.
The judge, Ada Brown, said the plaintiffs in a lawsuit challenging the ban are likely to prevail in a final ruling based on their argument that the FTC lacks statutory authority to promulgate the ban, and that the rule is overly broad because it "imposes a one-size-fits-all approach with no end date."
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