Last week, on the eve of the effective date of the FTC's ban on non-compete agreements, a Texas federal district court found that the agency had exceeded its authority in enacting the ban. The Court also explained that its ruling applies nationwide and, while it can be appealed by the FTC, it is clear in the interim that:

• The ban against non-compete agreements will no longer become effective on September 4, 2024; and
• It will take months, if not years, for this issue to be resolved in the courts.

As a result, employers can stand down as far as strict compliance with the provisions of the FTC ban, for now. However, it should be noted that state laws prohibiting or proscribing the limits of non-compete agreements are still valid, and scrutiny of broad non-compete agreements as an undue restraint on trade by federal and state-level governments will continue to gain momentum, as it has over the past few years.

Employers should thus take care to narrowly tailor future non-competes to their specific needs or run the risk that they will be challenged as overly broad.

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