On Tuesday, August 20, 2024, a federal court in the Northern District of Texas struck down the Federal Trade Commission’s (“FTC”) rule banning the use and enforcement of most non-compete clauses. The rule, that was scheduled to go into effect on September 4, 2024, has been set aside in its entirety. Employers are no longer required to provide notice to current and former employees that their non-compete clauses cannot be enforced. The court struck down the rule on two different bases. First, it found that Congress had not given the FTC the authority to make substantive rules regarding unfair competition. Second, the court
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Non-Competes Are Going Away – Or Are They?
In April, the Federal Trade Commission (“FTC”) enacted a new rule, set to go into effect on September 4th, 2024, that effectively eliminates most existing Non-Compete Agreements and prohibits new ones from being entered into within the United States. Although it is scheduled to go into effect, there are several court challenges to it, so there is a very real possibility that it will either not go into effect as scheduled or will be modified in some way. The Ryan LLC v. FTC case in the Eastern District of Texas is one to pay particular attention to. Forward thinking employers should familiarize
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