Battle Over FTC's Noncompete Ban Continues

The battle over the Federal Trade Commission's (FTC) ban on noncompete agreements may not be over, as the agency has appealed a federal court decision which struck down the rule nationwide.

In April 2024, the FTC issued a final rule finding that noncompete agreements constitute an unfair method of competition in violation of Section 5 of the FTC Act, banning nearly all noncompetes.

The rule, set to take effect on Sept. 4, 2024, faced immediate challenges in multiple courts.

In Pennsylvania, a federal court sided with the agency and denied an employer's motion for a preliminary injunction staying the effective date of the rule. The court found that the employer failed to establish irreparable harm, as monetary loss and business expenses alone are not enough to provide the basis for injunctive relief, and the employer was unable to demonstrate a likelihood of success on the merits of its claim.