The controversial non-compete ban issued by the Federal Trade Commission (“FTC”) on April 23, 2024 was blocked by a Texas federal judge for the entire country.
The FTC ban was scheduled to go into effect on September 4, 2024. A number of business groups including the U.S. Chamber of Commerce quickly filed lawsuits objecting to the rule and seeking an injunction to block it from being implemented.
On July 3, 2024, U.S. District Judge Ada Brown (a 2019 President Trump appointee) in the Northern District of Texas issued an opinion criticizing the broad scope of the FTC’s proposed rule. The Court found that the FTC exceeded its authority by attempting to regulate what it believes is unfair competition by employers in their use of non-competes. Judge Brown’s decision stopped the rule from going into effect for Ryan LLC and the U.S. Chamber of Commerce (but not its members), and she indicated she would issue an opinion on the merits by August 30, 2024.
That more comprehensive ruling was issued on August 20, 2024, blocking the rule on a national basis as exceeding the scope of the FTC’s authority.
This means there is no federal ban to non-compete agreements. As long as they comply with the applicable state law, non-competes are still allowed and enforceable.