Texas Judge Finds FTC “Likely” Lacks Authority to Ban Non-Competes

A Texas district court judge on July 3, 2024 preliminarily enjoined the Federal Trade Commission (“FTC”) from enforcing its non-compete ban against the specific plaintiffs who challenged it. The court declined to issue a nationwide injunction at this time. The court found that the FTC likely does not have the authority under the Federal Trade Commission Act to promulgate the rule. Our overview of the rule is located here.

This is a positive signal for employers who utilize noncompete agreements. The court indicated that it would rule on the ultimate question of whether the noncompete rule is lawful by August 30, 2024. The noncompete rule is scheduled to take effect on September 4, 2024.

We will continue to monitor developments in this space, and Honigman’s Labor and Employment attorneys are available for any questions.