Court Strikes Down FTC’s Non-Compete Ban

Mehreen Ahmed, Alon Kapen, Domenique Camacho Moran
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On Tuesday, August 20, 2024, the United States District Court in Texas found the FTC rule banning non-compete agreements to be “arbitrary and capricious.”

Finding the FTC had exceeded its authority, the Court permanently blocked enforcement of the rule set to take effect on September 4, 2024. Despite the Court’s ruling, the FTC has indicated it will continue pursuing case-by-case enforcement actions.

What does this mean?

  • Employers need not send any notice to employees regarding the enforceability of non-compete agreements.
  • Restrictive Covenant Agreements will continue to be subject to state and local laws regarding enforceability.

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