District Courts Are Split On Whether The FTC's Noncompete Ban Should Go Into Effect

In April 2024, the Federal Trade Commission (FTC) issued a final rule banning noncompete agreements nationwide, with the intent of "protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation." While the ban is set to take effect on September 4, 2024, its validity is currently being contested in federal courts throughout the country, with the primary focus on the extent of the FTC's rulemaking authority. The first two District Courts to rule on the issue have thus far reached opposing conclusions.

In early July, U.S. District Judge Ada Brown of the Northern District of Texas issued a preliminary injunction which prevents the FTC from enforcing the noncompete ban specifically against the U.S. Chamber of Commerce and Ryan LLC (a global tax services firm), both of which had challenged the rule, until she makes a ruling on the merits in late August. Judge Brown's order indicates that she will likely strike