Employment & Labor Law

A federal judge issued a nation-wide injunction on August 20, 2024, barring enforcement of the Federal Trade Commission's Rule banning noncompete agreements in the U.S. This Rule was slated to go into effect on September 4, 2024. This judge, in the Northern District of Texas, issued an injunction in July that only blocked the noncompete ban within the limited jurisdiction of that federal district. The judge now made the injunction nationwide. Another federal court judge in eastern Pennsylvania in July declined to enjoin the noncompete ban, ruling that it appeared to be within the FTC’s authority. This legal battle is far from over, as further proceedings remain in the district courts, with appeals likely now and/or later. The final resolution of this issue will take many months and likely years to play out.

The immediate takeaway is that, for now, existing noncompete agreements remain in effect and employers do not have to issue notices to employees otherwise as was called for in the FTC’s Rule. Further court, legislative, or FTC developments will occur but not quickly. In the meantime, there are measures that employers as well as employees can take to strengthen their respective positions regardless of the outcome of these legal battles. See, for example, Houston Harbaugh’s recent articles on protecting trade secrets and confidential information and discussing the FTC Rule, including alternative agreements to noncompetes that limit post-employment activities in less restrictive ways than a typical noncompete provision.

If you have any questions regarding the FTC Noncompete decision, please contact the author, Craig M. Brooks at 412-288-2214 or cbrooks@hh-law.com, or your existing Houston Harbaugh attorney with your questions or plans.