In a win for the US Federal Trade Commission, a Pennsylvania federal judge declined Tuesday to temporarily block a tree service company’s challenge of the agency’s nationwide ban on noncompete contracts. Such agreements can restrict employees from working for a company’s competitors for a period of time within a specified geographic area after the worker leaves a company.

“The divergent rulings create significant uncertainty as to the validity of the FTC’s rule, leaving businesses and workers without guidance as to whether the rule will go into effect on Sept. 4, 2024, as scheduled,” wrote law firm BakerHostetler in a note on its website.

The decision creates a divide in the judiciary over the regulator’s powers, Bloomberg Law reported.

The FTC has clear legal authority to issue “procedural and substantive rules as is necessary to prevent unfair methods of competition,” said Judge Kelley Brisbon Hodge of the US District Court for the Eastern District of Pennsylvania. ATS Tree Services failed to establish it would eventually succeed in its case based on the merits of its argument that the agency lacks such power, she said.

The company, which employs about 12 people, most of whom are subject to noncompete agreements, failed to show it would suffer irreparable harm if the rule were to go into effect. “On that finding alone, the court must deny plaintiff’s motion,” the judge said, rejecting the company’s push for a preliminary injunction.

The US Federal Trade Commission on April 23 voted 3 to 2 to approve a final rule that bans worker noncompete agreements in worker contracts. But on July 3, a federal judge in Dallas delayed implementation implementation of the US Federal Trade Commission’s near-total ban on noncompete agreements, siding with the US Chamber of Commerce and a Texas-based tax firm that claimed in a lawsuit the agency lacks authority to craft rules defining unfair methods of competition.