We wanted to share some important news regarding the FTC non-compete rule with you. As you may know, the rule was scheduled to take effect on September 4, 2024. However, on August 20, 2024, Judge Ada Brown of the Northern District of Texas, in the case of Ryan v. FTC, issued a summary judgment order that “set aside” the FTC’s new prohibition on employment-based non-competes.
Judge Brown concluded that the FTC lacks the statutory authority to issue this substantive rule and that it is “arbitrary and capricious.” She therefore ordered that it is unlawful and cannot take effect on September 4 as previously scheduled.
The FTC stated that the agency is considering an appeal to the Fifth Circuit Court of Appeals and that it still has the authority to institute individual enforcement actions against the use of non-competes.
While it remains to be seen how this case will ultimately be resolved, we wanted to give you this update to let you know about the current status of the rule.
As always, if you have any questions about how this ruling may affect your business, please do not hesitate to contact us.
Simon | Paschal PLLC
