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July 10, 2024
United States District Court Partially Blocks the FTCs Attempt To Ban Employment Noncompete Agreements
In an important first step toward invalidating the ban on non-compete agreements issued by the Federal Trade Commission (FTC), on July 3, 2024, the United States District Court for the Northern District of Texas granted a preliminary injunction permitting the organizations which sued to invalidate the FTC ban from having to abide by the ban until their litigations are resolved. In pertinent part, the District Court reasoned that “the FTC lacks substantive rulemaking authority with respect to unfair methods of competition.” The District Court concluded that the ban, “which imposes a one-size fits all approach with no end date without sufficient consideration of reasonable alternatives, was unreasonably overbroad.”
The District Court advised that it would rule on the merits of the FTC ban on or before August 30, 2024. For those entities which did not file suit against the ban, it remains to take effect on September 4, 2024. The national defendants against whom the ban is stayed include the U.S. Chamber of Commerce and the Business Roundtable. At present, employers who are members of those organizations would still need to adhere to the FTC ban on September 4, 2024.
We will continue to monitor all legal challenges to the FTC ban and will keep you apprised if and when a nationwide injunction is entered. In the interim, our team of employment attorneys at Hill Wallack stand ready to guide employers.
Susan Swatski
(609) 734-6318 direct dial
