US federal judge issues order barring Federal Trade Commission’s ban on noncompetes

On August 20, 2024, Judge Ada Brown of the U.S. District Court for the Northern District of Texas granted the US Chamber of Commerce’s motion for preliminary injunction.

The injunction bars the Federal Trade Commission’s (FTC) Noncompete Rule, which was set to go into effect on September 4, 2024. The FTC Rule would have banned most noncompete agreements and required employers to provide notice to current and former employees who were subject to such agreements, that the agreements were void and unenforceable.

Judge Brown concluded that the FTC lacked statutory authority to issue the Noncompete Rule and that the Rule is an unlawful agency action. Judge Brown ordered that the Rule shall not be enforced or take effect on September 4.

Employers should continue to monitor this decision and any subsequent appeals for further guidance on the effectiveness of the Noncompete Rule.

Client alert authored by Markeya A. Fowler(312 849 4126), associate.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.