On August 20, 2024, the United States District Court for the Northern District of Texas, Dallas Division, overturned the FTC Non-Compete Rule (16 C.F.R. § 910.1-.6), which was set to ban all new non-compete agreements in the U.S. starting September 4, 2024.

In the case of Ryan LLC, et al., v. Federal Trade Commission (Civil Action No. 3:24-CV-00986-E), the court had already issued a preliminary injunction on July 3, 2024, preventing the Rule from being enforced against the Plaintiffs. The August 20 order has now completely nullified the Rule, stating it is too broad and that the FTC did not have the authority to create it. As a result, the Rule will not take effect on September 4, 2024, or thereafter.

The FTC is considering an appeal. In the meantime, energy companies should operate under the status quo prior to the FTC’s Non-Compete Rule and seek legal guidance when necessary to ensure compliance with any applicable state laws.