With just two weeks to go before the Federal Trade Commission’s nationwide ban on non-compete agreements is set to go into effect, and with a Texas federal court still deciding whether to block the rule from going into effect nationwide, employers are left to wait as the clock ticks.

As we have previously reported in the articles “FTC’s ban on noncompete agreements halted … sort of” and “Two federal courts split on upholding FTC’s ban on noncompete agreements,” the U.S. District Court for the Northern District of Texas is the only federal court still reviewing a challenge to the FTC rule.  The judge initially issued an order in early July staying the enforceability of the rule, but only as to the named plaintiffs in the suit. The court also said it intended to rule on the “ultimate merits” before the effective date of the rule.

With the implementation deadline of the FTC ban on non-competes just around the corner, employers should be mindful of two important dates: August 30 and September 4.

August 30, 2024:  The U.S. District Court for the Northern District of Texas indicated it would issue a final order by August 30 on motions submitted by the plaintiffs seeking to block the FTC rule from going into effect. It is possible the court expands its ruling to include all employers in the state of Texas, or even potentially to cover employers nationwide. However, mere days stand between this date and the rule’s effective date.

September 4, 2024: If the FTC ban on non-competes is not blocked nationwide, or is not blocked in Oklahoma or other states, it will automatically become effective in those areas on September 4.  As a reminder, companies have notice requirements that must be accomplished by this date. For each existing non-compete clause, the company must provide clear and conspicuous notice to the worker by September 4 that the worker’s non-compete clause will not be, and cannot legally be, enforced against the worker. The notice must, at a minimum, identify the company representative who entered into the non-compete with the worker and be delivered by hand, mail, email or text message, as specified in the Rule. As of September 4, companies would also be prohibited from entering into or enforcing any non-competes with workers.

The Labor and Employment Group at McAfee & Taft is keeping a close eye on these upcoming deadlines and will provide an update if the Texas federal court blocks the ban from going into effect in Texas or nationally.