On August 20, 2024, a significant legal development occurred concerning the FTC’s proposed non-compete rule. The U.S. District Court for the Northern District of Texas, in the case Ryan, LLC v. FTC, ruled that the FTC's non-compete rule is unlawful. As a result, the court granted a summary judgment blocking the rule from taking effect on September 4, 2024, or at any time thereafter. Unlike previous injunctions, this ruling has a nationwide impact, preventing the FTC from enforcing the rule against any company across the country.
What’s Next?
The FTC may appeal this ruling, but it faces an uphill battle. The U.S. Court of Appeals for the Fifth Circuit, which would hear any appeal, and potentially the U.S. Supreme Court, have recently issued decisions that limit federal agencies' powers. This case challenges not only the non-compete rule but also the FTC's broader authority to make substantive rules regarding unfair methods of competition.
Action Items for Employers
Given this ruling, employers can delay any preparations to comply with the FTC’s now-blocked rule. However, they should stay vigilant and monitor the appellate process in the Ryan case, as future developments could further alter the legal landscape.
This ruling marks a critical juncture in the ongoing debate over non-compete agreements and the FTC’s regulatory reach.
It's still an opportune time for companies to assess their employment agreements. Considerations should include state-by-state uniformity and compliance, identifying categories of employees subject to these agreements, and ensuring trade secrets are adequately protected.
If you have any questions or need guidance on how this ruling might impact your business, please don’t hesitate to contact Goosmann Law Firm. Our experienced team is here to help you navigate these complex legal changes and ensure your business remains compliant and protected.