As an update to our previous blog posts (FTC Bans Noncompetes and Noncompete Update), the Federal Trade Commissions' non-compete rule has been enjoined.
Just two weeks before the Federal Trade Commission's ("FTC") rule to federally ban non-competes was to go into effect (the "Final Rule"), on August 20, 2024, a Texas federal judge issued a nationwide injunction which barred the implementation of the Final Rule. The court held that the FTC lacked statutory authority to adopt the Final Rule and creation of the Final Rule was an unlawful agency action by the FTC.
This decision has a nationwide effect and affects all persons equally. Though the FTC may appeal the decision, for now, the Final Rule is set aside and employer's non-compete agreements with employees will survive, provided they comply with applicable state and local law. However, employers should understand that there is still heightened scrutiny around non-compete agreements and the restrictions of such agreements need to be reasonable to be enforceable.
Please reach out to Gutwein Law if you have any questions about the Final Rule or enforceability of your current non-compete agreements.
