Update: FTC's Non-Compete Rule Set Aside

Direct sellers can breathe easy for the time being. On August 20th, Judge Ada Brown for the United States District Court for the Northern District of Texas set aside the Federal Trade Commission's (FTC) rule imposing a national ban on non-compete agreements, preventing the rule from taking effect across the country.

In a 27-page opinion, Judge Brown held in Ryan LLC v. Federal Trade Commission that the FTC lacks the authority to adopt such broad rules as a nationwide ban on non-compete agreements to ban practices it deems unfair methods of competition. Judge Brown went on to hold that even if the FTC had the power to adopt its rule, the agency did not have a justifiable reason "to impose such a sweeping prohibition—that prohibits entering or enforcing virtually all non-competes—instead of targeting specific, harmful non-competes." In other words, the rule was "arbitrary and capricious" and therefore invalid.