The Federal Trade Commission (“FTC”) adopted a rule on April 23, 2024 (the “Noncompete Ban”), that prohibited employers nationwide from entering into new noncompete agreements or enforcing existing noncompete agreements, except as to existing agreements with senior executives, sale-of-business noncompete agreements, and causes of action that would have accrued prior to September 4, 2024. That Noncompete Ban was set to become effective on September 4, 2024.
On August 20, 2024, however, Judge Ada Brown of the U.S. District Court for the Northern District of Texas enjoined the implementation of the Noncompete Ban, meaning that it will no longer take effect on September 4, 2024 (or at any point thereafter, unless there is a successful appeal of Judge Brown’s ruling). In particular, Judge Brown found that the FTC lacked authority to issue substantive rules related to unfair methods of competition, which importantly includes the Noncompete Ban. This ruling returns employers to the status quo, allowing for enforcement of noncompete agreements according to current state-specific frameworks.
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