Less than 24 hours after the Federal Trade Commission issued a final rule Tuesday that will prohibit employers across the country from using noncompete agreements in most instances, the rule faces its first legal challenge from business groups.

The US Chamber of Commerce and Business Roundtable, with other groups, filed a lawsuit Wednesday challenging the rule.

Under the new rule, existing noncompetes for most workers no longer will be enforceable. Existing noncompetes for senior executives — defined as employees in policy-making positions and earning more than $151,164 annually — can remain in force, the commission said, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives.

The rule may not apply to some nonprofit organizations, although the FTC noted that “not all entities claiming tax-exempt status as nonprofits fall outside the Commission’s jurisdiction.”

US Chamber of Commerce President and CEO Suzanne P. Clark warned Tuesday that the group would sue, saying the rule was “a blatant power grab that will undermine American businesses’ ability to remain competitive.”

Wednesday, the Chamber followed through, filing suit in Tyler, TX, joined by The Business Roundtable, the Texas Association of Business and the Longview Chamber of Commerce. Another suit was filed by Ryan LLC, a global tax services company, in the Northern District of Texas, also challenging the rule and the FTC’s authority to issue the rule.

The Business Roundtable includes, among other members, chief executives from long-term care pharmacy Omnicare parent CVS Health, the Carlyle Group, CBRE Group and several pharmaceutical companies and consultancies.

The business groups maintain that noncompete agreements benefit both employers and workers alike, according to court records.

“The employer protects its workforce investments and sensitive information, and the worker benefits from increased training, access to more information, and an opportunity to bargain for higher pay,” they said in their filing.

The Business Roundtable, in a statement, said that the ban is “far beyond the agency’s statutory authority” and added that it was “confident this unwarranted regulatory overreach will be overturned by the courts.” 

As of now, the rule is set to go into effect 120 days after it is published in the Federal Register, but the pending litigation may change things.