FTC Non-Compete Ban Blocked by Nationwide Injunction

On August 20, 2024,  the United States District Court for the Northern District of Texas ruled that the Federal Trade Commission (“FTC”) lacks substantive rulemaking authority with respect to regulating unfair methods of competition.  Therefore, the Court concluded that the FTC exceeded its statutory authority in creating the non-compete ban (the “Ban”).  The Court also determined that the Ban was arbitrary and capricious because it was unreasonably overbroad.

As a result of this ruling, the Ban has been set aside nationwide.  Thus, the Ban will no longer go into effect September 4, 2024.  This ruling is subject to an appeal to the Fifth Circuit.  It is unclear at this time whether the FTC plans to appeal the decision.  A summary of the FTC Ban can be found here:  https://bit.ly/3w9bg6m.

We will continue to monitor developments regarding the Ban.  Businesses with specific questions about noncompete clauses should contact Nikole Canute, Scott Dwyer, Nate Wolf, Dominic Clolinger, or Kathryn Stegink as soon as practicable.