Yesterday, a federal judge blocked the FTC’s attempt to restrict employers from entering into non-compete agreements with employees and other contractors. In issuing her decision, Judge Ada Brown determined that the FTC “lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious.” The FTC’s rule “shall not be enforced or otherwise take effect on its effective date of September 4, 2024 or thereafter.” In response to the court’s ruling, employers no longer need to follow prior guidance pertaining to the new rule, including modifying employee agreements and notifying employees that the non-compete provisions are void.
In response to Judge Brown’s decision, the FTC indicated that it is “seriously considering a potential appeal,” and that the decision does “not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.” Additionally, employers should note that the recent decision does not affect any state laws that prohibit non-compete provisions. If an employer is prohibited by applicable state law from entering into a non-compete agreement, they must ensure continued compliance with the requirements of that law.
If you have any questions about how the new ruling affects your organization, please contact us.
In response to Judge Brown’s decision, the FTC indicated that it is “seriously considering a potential appeal,” and that the decision does “not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.” Additionally, employers should note that the recent decision does not affect any state laws that prohibit non-compete provisions. If an employer is prohibited by applicable state law from entering into a non-compete agreement, they must ensure continued compliance with the requirements of that law.
If you have any questions about how the new ruling affects your organization, please contact us.