FTC Non-compete Ban Partially Blocked – For Now

As we reported previously, the Federal Trade Commission (FTC) announced a new rule that "[i]t is an unfair method of competition—and therefore a violation of Section 5 of the FTC Act—for employers to enter into non-compete clauses with workers." As a result, the final rule generally bars most non-compete agreements. The rule's effective date is September 4, 2024.

Immediately after the rule was announced, several lawsuits were filed in federal courts in Texas and Pennsylvania challenging the rule. On July 3, the U.S. District Court for the Northern District of Texas issued a preliminary injunction in the suit brought by tax firm Ryan LLC and the U.S. Chamber of Commerce, holding the plaintiffs are "substantially likely to prevail on the merits of their challenge to the FTC's Non-Compete Rule."