Federal Court Strikes Down FTC Ban on Non-Competes

A federal court in Texas has struck down an FTC ruling which would have banned the majority of non-compete agreements. The ban was scheduled to take effect on September 4, 2024. The court’s decision is available here.

The court concluded that the FTC did not have the statutory authority to issue the rule because Congress had not directed the agency to take the action, and that the FTC rule was overbroad and based on inconsistent and flawed empirical evidence.

Because of the court’s ruling, the FTC’s ban will not become effective. Employers do not need to send notices to employees who are subject to non-competes, and subject to applicable state laws, they can continue to include non-competes in agreements with new employees and consultants.

The FTC has said it is considering appealing the court’s decision.