As you know, the Federal Trade Commission (FTC) issued a final rule that was set to essentially ban noncompete agreements nationwide (with few exceptions). The rule was to take effect on September 4, 2024.
Earlier this week, however, the U.S. District Court for the Northern District of Texas struck down the FTC’s ban, finding that (1) the FTC exceeded its statutory authority in promulgating the rule, and (2) the rule is arbitrary and capricious because it is unreasonably overbroad without reasonable explanation, and imposes a one-size-fits-all approach with no end date, which fails to establish a “rational connection between the facts found and the choice made.”
It is possible that the FTC will appeal the court’s decision to reverse the ban. As of now, though, the ban will no longer take effect on September 4.
Keep in mind that certain states have their own limitations on noncompete agreements. The court’s decision in this case does not affect those limitations — they will remain in effect moving forward.
