Texas Court Sets Aside FTC Noncompete Rule

On August 20, 2024, a federal court in Dallas, Texas, found unlawful and set aside the Federal Trade Commission's Rule on Noncompete Clauses (the "Rule") issued by the agency on April 30, 2024. Scheduled to take effect on September 4, the Rule attempted to invalidate most already-existing noncompete covenants and to ban all noncompetes entered into after September 4. The same court issued a preliminary injunction against the Rule in July 2024, but that injunction applied only to the two plaintiffs in the case (Ryan LLC and the U.S. Chamber of Commerce), leaving employers nationwide uncertain as to whether they needed to comply with the Rule in September. The August 20 decision makes clear that employers nationwide need not comply with the FTC Rule on September 4 or thereafter.