On August 20, 2024, a federal judge in Texas barred the Federal Trade Commission’s noncompete ban from taking effect. The rule was set to take effect September 4, 2024, and would have substantially altered the landscape for non-competes across the nation, making most employee noncompetes invalid. Now the rule’s future is uncertain. The recent federal court ruling blocks the FTC’s noncompete ban from taking effect. The FTC has indicated that it might appeal the ruling but no actions have taken place yet, and any appeal would take time to resolve.
After announcing the rule, the FTC was sued in various courts across the country. Up until last week, it appeared that the rule would take effect as planned. At a hearing earlier in August, a federal judge in Florida ruled that the ban was likely invalid and issued a very limited block, but only as to the plaintiffs in that case. In July, however, a judge in Philadelphia ruled in favor of the FTC ban concluding that noncompetes are virtually never justified. The recent Texas ruling will block the rule on a national scale.
The FTC previously passed the rule in April of this year but has faced opposition from the start. While the FTC cited findings that noncompetes negatively impact employees and businesses in numerous ways, opponents said banning noncompetes across the board would negatively impact employees and businesses. For now, noncompetes remain subject to state laws.
Mallon Lonnquist Morris & Watrous, PLLC is a business, transactional, real estate, and litigation law firm in Denver, Colorado. The attorneys at MLMW regularly represent businesses and individuals in business and contract disputes and related litigation including corporate, employment, partnership, construction, and service agreement disputes.
