Texas Court Blocks FTC’s Pending Ban On Non-Compete Agreements

On August 20, 2024, a Federal District Court Judge in Texas ruled that the Federal Trade
Commission (FTC) could not enforce its near total ban on non-compete agreements,
which was scheduled to take effect on September 4, 2024. The FTC issued the ban on
April 23, 2024. Additional information on the ban is available in our April 24, 2024 Client
Alert, available on our website at the following link: FTC Issues Final Rule Banning Use
of Non-Compete Agreements – Ufberg & Associates (ufberglaw.com) (found at Ufberg &
Associates’ website, under News & Alerts). Before the Texas court ruling, the ban had
been scheduled to take effect on September 4, 2024.

While the Texas court ruling is the first to enter a permanent nationwide injunction against
the FTC ban, there are two other appeals pending. A Federal District Court in Florida has
entered a preliminary injunction against the ban, applicable only to the plaintiffs in that
case, and a Federal District Court in Pennsylvania tentatively refused to issue an
injunction against the ban. Final rulings are pending in both cases.

The FTC has stated that it is “seriously considering” an appeal of the Texas court ruling,
which would go to the Fifth Circuit Court of Appeals. We believe it is likely that this issue
will eventually be heard by the U.S. Supreme Court – particularly if eventual appeals of
the pending Florida and Pennsylvania court decisions (which would be appealed to the
Eleventh and Third Circuits, respectively) lead to a Circuit split on the issue. We will
continue to monitor all developments and will issue updates regarding any appeals in this
matter.

If you have any questions about the FTC’s Rule banning non-compete agreements or the
impact of the Texas Court ruling on your business, please call our office. Thank you.

This Client Alert provides a general overview of new legal developments. It is not intended to
provide legal advice. If you have questions or would like more information about how these
developments may affect your business, please contact us at (570) 341-8800.