FTC Ban on Non-Compete Agreements Set Aside Nationally

The Federal Trade Commission’s (FTC) “Final Rule”, which would have banned certain non-compete agreements beginning on September 4, 2024, has been indefinitely set aside. On August 20, 2024, the U.S. District Court for the Northern District of Texas in Ryan LLC v. Federal Trade Commission, held that the FTC’s non-compete rule is unlawful. The Final Rule (16 C.F.R. Part 910), which was first issued back in April of this year would have banned most non-compete agreements nationwide and created a mandate for employers to notify any employees impacted by non-compete agreements. The Northern District of Texas concluded that although the FTC has some authority to promulgate rules to preclude unfair methods of competition, the FTC exceeded its authority with the Final Rule, and determined that the Final Rule itself was arbitrary and capricious.

The FTC may decide to appeal the decision to set aside the Final Rule. For the time being, employers may pause their efforts to comply with the Final Rule. O’Reilly Rancilio P.C. will continue to monitor all developments with respect to the appellate process. Please contact Charles E. Turnbull at cturnbull@orlaw.com or Arvin F. Zora at azora@orlaw.com with any questions or if you would like to discuss further.