By: Laura M. Raisty
A federal court in Texas has blocked the Federal Trade Commission’s (“FTC”) noncompete ban nationwide, holding that the FTC does not have the authority to ban non-competition agreements.
On August 20, 2024, the United States District Court for the Northern District of Texas issued a ruling in Ryan, LLC v. Federal Trade Commission, in which it concluded that that the FTC “lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious.”
Accordingly, the FTC’s final rule banning non-compete agreements with workers of for-profit businesses, which was the subject of a previous K&S client alert [can we add a link?] and was to be effective as of September 4, 2024, will not take effect and cannot be enforced. So, we are back to the status quo.
The FTC announced that it is considering whether to appeal the decision, and the case has the potential to reach the United States Supreme Court. Unless the Texas court’s ruling is overturned on appeal or if the FTC seeks and is granted a stay of the implementation of the Ryan decision, the FTC’s non-compete ban has been lifted and businesses will not be prohibited from using non-compete agreements.
Our team will continue to monitor developments relating to the FTC’s efforts to ban non-compete agreements, and employers and employees with questions are encouraged to contact an employment attorney at Kenney & Sams.
*****
This alert is for informational purposes only and may be considered advertising. It does not constitute the rendering of legal, tax, or professional advice or services. You should seek specific detailed legal advice prior to taking any definitive actions.