A Texas-Sized Sigh of Relief: FTC Non-Compete Rule Struck Down Nationwide

Yesterday, Judge Ada Brown of the U.S. District Court for the Northern District of Texas issued a nationwide injunction against enforcement of the FTC’s Rule banning non-competition agreements. The order is broad and concluded that the FTC exceeded its statutory authority when it promulgated the Rule, and that the Rule is arbitrary and capricious. The decision to set aside the Rule has a nationwide effect, prohibiting the enforcement of the FTC’s Rule and vacating the upcoming September 4, 2024 effective date. 

With this injunction, employers are relieved of the obligation to issue notices to employees affected by the Rule. While the FTC may appeal the District Court’s decision to the Fifth Circuit Court of Appeals, that court is known to be business-friendly and pro-employer, and the chances of a reversal are slim.

The case is Ryan LLC et al. v. Federal Trade Commission, Case No. 3:24-cv-00986 (N.D. Tex).