And Enjoins FTC from Enforcing Ban Against Named Plaintiffs and Intervenors.
The Federal Trade Commission’s (FTC) final rule banning most non-compete agreements is set to go into effect on September 4, 2024. If the final rule goes into effect, it will invalidate most employee non-compete agreements and will require employers to provide notice to most workers (current and former) that existing non-compete agreements will not be enforced. Chamberlain Hrdlicka’s prior alert regarding the Final Rule can be found here.
On July 3, 2024, in the case of Ryan, LLC v. The Federal Trade Commission, a Texas federal court issued a preliminary injunction that blocks the FTC from implementing or enforcing the non-compete ban against the entities that brought and joined the lawsuit. Significantly, the Court declined to grant a nationwide injunction that would extend to all employers.
As it stands, the non-compete ban is still set to become effective on September 4, 2024, for all other businesses nationwide. Nevertheless, the court’s ruling is a significant win for employers and paves the way for future legal challenges. Specifically, the court found that the plaintiffs are likely to prevail on their arguments that the non-compete ban exceeds the FTC’s statutory authority and is arbitrary and capricious.
Although the Ryan Court’s recent ruling is limited in scope, there is still a good possibility that the FTC’s non-compete ban will be blocked for all employers. The Ryan Court intends to issue a final decision on the merits by August 30, 2024. There are additional legal challenges to the non-compete rule pending in different courts. Accordingly, whether and when the non-compete ban will go into effect remains uncertain.
Chamberlain Hrdlicka’s Labor & Employment Group will continue to monitor and provide updates regarding the status of the FTC’s non-compete ban. Please feel free to send us an e-mail or call us if you have any questions.
Julie Offerman
Julie.Offerman@Chamberlainlaw.com
Kellen R. Scott
Kellen.Scott@Chamberlainlaw.com
