As previously reported by HR Legalist, the Federal Trade Commission (FTC) recently finalized a rule that would prohibit non-competes in most contexts, and which was set to take effect on September 4th of this year. However, on July 3rd, in Ryan, LLC v. Federal Trade Commission Case[1], Northern District of Texas Judge Ada Brown issued an order staying the effective date of the FTC ban on non-competes, but only as to the Plaintiffs in that case (a tax firm and several business organizations). The judge did not extend the stay on a nationwide basis. And, while the Judge concluded that Plaintiffs are likely to succeed on the merits of the argument that the FTC Rule is unlawful based on the FTC’s lack of authority to issue such a rule, the Judge will not rule on the ultimate merits until on or before August 30, 2024. We expect Judge Brown’s ultimate ruling to be appealed to the Fifth Circuit Court of Appeals, possibly delaying the ultimate decision further. Thus, while the ruling is good news for employers, as of now, to paraphrase Yogi Berra, it is not over until it’s over.

It should be noted that two other cases are pending on the issue of the FTC’s authority to ban non-competes, one of which is pending in Pennsylvania with a ruling expected later this month.  Also, as noted in our most recent blog, the Supreme Court’s landmark decision in the Loper Bright case, overturning the Chevron decision, is expected to make it easier for litigants—like the Plaintiffs who just scored a victory in Ryan—to challenge administrative regulations.  

[1] No. 3:24-cv-00986

[View source.]