Earlier this month, we reported on a preliminary injunction granted to the plaintiffs in a lawsuit filed in federal district court in Texas, seeking to block the Federal Trade Commission’s regulations voiding most employment noncompetition agreements in the U.S. The federal judge agreed to issue the injunction, but limited it to the named plaintiffs in the suit. Following this decision, the U.S. Chamber of Commerce filed a motion asking the judge to reconsider the scope of the injunction, seeking to apply it to all employers.

Last week, the judge denied the motion, declining to expand the scope of the injunction. After the initial ruling, the federal court indicated its intent to make a determination on the merits of the suit in late August, shortly before the scheduled September 4 effective date of the rule. On Tuesday, the federal judge in a second lawsuit filed in Pennsylvania denied the plaintiffs' request for an injunction blocking the rules.

This legal maneuvering means that employers may not have a clear idea on whether the rules will take effect until close to that scheduled effective date. If the Texas court denies the requested relief, employers will be required to notify employees with noncompetes of the voiding of those restrictions, and refrain from entering into new agreements. Given the stakes involved, employers may want to wait until this ruling is issued before taking any steps to withdraw or modify their noncompetition agreements.

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