Articles Discussing Restrictive Covenants In The Workplace And Other Topics Relating To Unfair Competition.

A Texas court has set aside the Federal Trade Commission’s (FTC’s) Final Rule banning almost all non-compete clauses days before it was set to take effect on Sept. 4. Ryan LLC v. FTC, No. 3:24-CV-00986-E, 2024 U.S. Dist. LEXIS 148488 (N.D. Tex. Aug. 20, 2024). The court’s ruling bars the FTC from enforcing the Final Rule nationwide. Although the FTC lost this battle, it may be winning the war.

On August 20, 2024, Judge Ada Brown of the US District Court for the Northern District of Texas set aside the Federal Trade Commission’s (FTC) rule that effectively prohibited the use of non-compete agreements. Interpreting the Administrative Procedure Act, which provides for judicial review of the actions of federal agencies like the FTC, the court found that the FTC’s non-compete ban was unlawful.

As of yesterday afternoon, employers across the country that utilize noncompete agreements may breathe a sigh of relief, as Judge Ada Brown beat her self-imposed deadline of August 30, 2024 and ordered an end to any enforcement of the Federal Trade Commission’s (“FTC”) Noncompete Rule.

Judge Brown, of the Northern District of Texas, evaluated competing motions for summary judgment filed by the Plaintiff, the related parties, and the FTC. She denied the FTC’s motion and granted the Plaintiffs’ motions. In reaching her decision, Judge Brown concluded that the FTC both exceeded its statutory authority derived from the Federal Trade Commission Act when it issued the Noncompete Rule earlier this year, and acted in an arbitrary and capricious manner in violation of the Administrative Procedures Act (“APA”).

Judge Brown concluded that the Federal Trade Commission Act provided a limited role for making “housekeeping” rules to preclude unfair and deceptive practices, and as a result, the FTC lacks the authority to create substantive rules such as the Noncompete Rule that it promulgated.

The post Federal Court Vacates FTC Non-Compete Ban appeared first on Hirsch Roberts Weinstein LLP.

Real World Impact: Making good on her promise to make a ruling on the FTC Noncompete Rule on or before August 30, 2024, United States District Judge Ada Brown granted a motion for summary judgment that sets aside the FTC Noncompete Rule and prohibits its enforcement nationwide. This means employers should go “pencils down” and stop preparing the notices we suggested here. The FTC Noncompete Rule is no longer a concern.

In July, this blog alerted you to the outcome of the preliminary injunction rulings in Ryan, LLC v. Federal Trade Commission and ATS Tree Services, LLC v. Federal Trade Commission, which resulted in a 1-1 tie between employers and the FTC. On August 14, 2024, employers won another limited injunction prohibiting the FTC from enforcing the ban against the plaintiff, Properties of the Villages, Inc. Properties of the Villages, Inc. v. Federal Trade Commission. Thus far, each employer victory is narrowly applied to the parties related to the immediate case. A nationwide ban or injunction is not in effect.

Therefore, all eyes are focused on Texas, as the Ryan court indicated that it would make a final decision on August 30, 2024. That decision may have more far-ranging implications.

Planning Ahead – Hope for the Best, Prepare for the Worst

On August 20, 2024, the U.S. District Court for the Northern District of Texas held unlawful and set aside the Federal Trade Commission’s (FTC) final rule prohibiting non-competition agreements with workers. The court entered a final judgment directing that the final rule not be enforced or otherwise take effect and

On August 14, 2024, a judge in the U.S. District Court for the Middle District of Florida ruled against the Federal Trade Commission’s (FTC) efforts to implement a nationwide noncompete ban. The Florida court’s decision aligns with a July 3, 2024, decision from the U.S. District Court for the Northern

On July 23, 2024, a judge in the U.S. District Court for the Eastern District of Pennsylvania denied a motion for preliminary injunction seeking to stay the effective date of the Federal Trade Commission’s (FTC) final noncompete rule. The court in ATS Tree Services, LLC v. Federal Trade Commission rejected

On July 3, 2024, as anticipated, U.S. District Judge Ada Brown of the U.S. District Court for the Northern District of Texas granted Plaintiffs’ and Plaintiff-Intervenors’ motion to stay and preliminarily enjoin the effective date of the Federal Trade Commission’s (FTC) final rule banning non-competition restrictions.

Real World Impact: The recent decision by a Texas federal district court judge enjoining the Federal Trade Commission (FTC) from implementing its regulation banning most noncompetes provides relief for the parties in that case but will not directly impact other employers . . . at least for now. While the ultimate viability of the FTC’s rule may be in question, to avoid future legal challenges to noncompete agreements, employers should continue to scrutinize these agreements to ensure they are strong, yet narrowly tailored to protect employers’ legitimate business interests.

On July 3, 2024, the U.S. District Court for the Northern District of Texas granted a preliminary injunction staying enforcement of the Federal Trade Commission’s (FTC) final rule prohibiting noncompetition employment agreements. The injunction is limited to the parties in that case, but it likely signals the FTC rule will