BlogLine

Federal Trade Commission appeals ruling blocking non-compete ban

11/19/24

By: Emily Muzyka

On October 18, 2024, the Federal Trade Commission (FTC) appealed the Northern District of Texas’ August 20, 2024 nationwide injunction against the FTC’s new Non-Compete Ban. The Northern District of Texas’ order in Ryan, LLC v. Federal Trade Commission set aside the FTC’s non-compete ban, 16 C.F.R. § 910.1-.6, ruling that the ban exceeded the FTC’s statutory authority and was arbitrary and capricious. For more on the Texas Court’s ruling see Freeman Mathis & Gary’s previous blog at: https://www.fmglaw.com/employment/texas-court-invalidates-federal-trade-commission-ban-against-non-competition-agreements-nationwide/ 

What Comes Next? 

For now, this appeal does not stay the Northern District of Texas’ ruling. Unless the Fifth Circuit Court of Appeals issues an order otherwise, the non-compete ban would continue to remain unenforceable nationwide.  

While this ruling from the Northern District of Texas is the first to enjoin the enforcement of the ban nationwide, it is not the only decision on the ban. In Florida, a district court granted a preliminary injunction regarding enforcement of the ban, though in that case it was limited to the plaintiff only. The FTC also appealed that ruling on September 24, 2024. This opens the door to a potential circuit split, as both the Fifth Circuit and Eleventh Circuit will now review the FTC rule.  

What Does This Mean for Employers? 

Currently, employers can continue their use of non-competes. However, employers should keep in mind that other regulators and states continue to limit and in some cases outright ban the use of non-competes in employment agreements. Employers should continue to watch the cases against the FTC non-compete ban to ensure compliance with court rulings and future developments.  

For more information, please contact Emily Muzyka at emily.muzyka@fmglaw.com or your local FMG attorney.