TEXAS — A federal judge in Texas on Wednesday delayed a ban on noncompete agreements for some workers in the U.S.

Unless the judge makes another ruling before Sept. 4, when the ban would have taken effect, the ban on noncompetes will be valid.

A noncompete agreement is a clause specifying that an employee can’t enter into competition with their employer after they no longer work for them.

Judge Ada Brown of the U.S. District Court for the Northern District of Texas said in a statement: “While this order is preliminary, the Court intends to rule on the ultimate merits of this action on or before August 30, 2024.”

The Federal Trade Commission first announced the rule banning noncompetes in April. The agency said in a statement that the clauses “keep wages low, suppress new ideas, and rob the American economy of dynamism.” 

“Noncompetes are a widespread and often exploitative practice imposing contractual conditions that prevent workers from taking a new job or starting a new business," the FTC's statement read. "Noncompetes often force workers to either stay in a job they want to leave or bear other significant harms and costs, such as being forced to switch to a lower-paying field, being forced to relocate, being forced to leave the workforce altogether, or being forced to defend against expensive litigation.”

Ryan LLC, a Texas-based software provider, sued the FTC shortly after it approved the ban. The U.S. Chamber of Commerce and other business groups also sued the agency separately.

The FTC estimates 30 million workers, or one in five Americans, are subject to noncompete agreements.