Cassidy Law
MONTH-IN-BRIEF (Aug 2024)
Antitrust Law
Texas Court Issues National Injunction Barring Enforcement of FTC’s Noncompete Ban
By Barbara Sicalides and Matthew DelDuca, Troutman Pepper Hamilton Sanders LLP
In a complete victory for plaintiffs, a Texas court permanently enjoined the Federal Trade Commission (FTC) rule banning nearly all employee noncompetes. In the absence of the court’s decision, the rule had been scheduled to become effective on September 4. While litigation regarding the FTC rule is pending in Texas, Florida, and Pennsylvania federal courts and the FTC has pledged to continue its efforts to stop the use of noncompetes, the Texas opinion gives businesses much-needed clarity regarding the rule and eliminates the need for employers to address the rule by September 4.
The FTC’s noncompete rule, if it had become effective, would have applied to any written or oral employment term or policy that penalized or prevented a worker from (a) seeking or accepting work in the US with a different employer, or (b) operating a business in the US after the conclusion of the employment that includes the term or condition. The rule, with narrow exceptions, prohibited new noncompete agreements on or after the effective date with any worker. The rule also prohibited enforcing or attempting to enforce a noncompete clause that existed before the effective date for any worker except for those who qualified as senior executives.
