Texas Court Blocks Enforcement of FTC’s Non-Compete Ban

On April 23, 2024, the U.S. Federal Trade Commission (“FTC”) issued a Final Rule banning nearly all post-employment non-compete agreements, with limited exceptions related to the sale of a business and certain pre-existing agreements with senior executives, and requiring employers to send notices to current and former employees informing them that their non-competes were unenforceable. The Final Rule, which was scheduled to go into effect on September 4, 2024, has been subject to a number of legal challenges. This week, in Ryan LLC v. Federal Trade Commission, the federal district court for the Northern District of Texas set aside the Final Rule, ordering that it not be enforced or otherwise take effect for any employers nationwide.

Kate TownleyAugust 21, 2024Non-Compete Agreements

Pennsylvania Court Refuses to Enjoin Enforcement of FTC’s Non-Compete Rule

On April 23, 2024, the U.S. Federal Trade Commission (“FTC”) voted in favor of a Final Rule banning nearly all post-employment non-compete agreements, with limited exceptions related to the sale of a business and certain pre-existing agreements with senior executives. As expected, the Final Rule has been subject to a number of legal challenges. Earlier this month, in Ryan LLC v. Federal Trade Commission, the Federal court for the Northern District of Texas granted a motion for preliminary injunction and postposed the effective date of the Final Rule as applied only to the plaintiffs in that matter, on the basis that the FTC lacked the substantive rule-making authority to issue the non-compete ban. This week, in ATS Tree Services, LLC v. Federal Trade Commission, the Federal court for the Eastern District of Pennsylvania ruled in the opposite direction, denying plaintiff’s motion for a preliminary injunction and stay of enforcement of the Final Rule.

Kate TownleyJuly 25, 2024Non-Compete Agreements

Texas Court Issues Limited Injunction to Non-Compete Rule

On April 23, 2024, the United States Federal Trade Commission (“FTC”) voted in favor of a Final Rule banning nearly all non-compete agreements, with limited exceptions related to the sale of a business and certain pre-existing agreements with senior executives. Since that time, the Final Rule became subject to different challenges, including by Ryan LLC, the U.S. Chamber of Commerce (who intervened in the Ryan suit), and ATS Tree Services, LLC (E.D.PA). On July 3, Judge Ada E. Brown of the Northern District of Texas ruled in Ryan LLC v. Federal Trade Commission that while the FTC has the power to prevent unfair methods of competition through administrative proceedings, “Congress did not explicitly give the [FTC] substantive rulemaking authority.”

Kristina GrimshawJuly 5, 2024Non-Compete Agreements

FTC Issues Rule Banning Non-Competes

As we reported in an alert last week, on April 23, 2024, the United States Federal Trade Commission (“FTC”) voted in favor of a Final Rule banning nearly all non-compete agreements, with limited exceptions related to the sale of a business and certain pre-existing agreements with senior executives. The Final Rule provides that it is an unfair method of competition, and therefore a violation of the Federal Trade Commission Act (the “Act”) to enter into, attempt to enter into, enforce, or attempt to enforce non-compete clauses with a worker or represent that the worker is subject to a non-compete clause. “Worker” is defined broadly under the Final Rule to include current or former employees, independent contractors, externs, interns, volunteers, apprentices, or sole proprietors who provide a service to a person.

Kate TownleyApril 29, 2024Non-Compete Agreements