On Friday, October 18, 2024, the Federal Trade Commission (FTC) gave notice that it would appeal Texas federal judge Ada Brown's decision to block its ban on employment noncompete agreements to the Fifth Circuit. The FTC's appeal is consistent with its ongoing efforts to expand rulemaking from consumer protection to unfair methods of competition.
In addition to the Texas case, there were two other cases challenging the FTC's ban on noncompetes with mixed results. There was a Pennsylvania that temporarily sided with the FTC, but the plaintiff then dropped the case. Another case was filed in Florida, where court ruled against the FTC's proposed ban on noncompetes, but limited the relief to the filing plaintiff, unlike Judge Brown.
Is it really about the noncompete ban at this point? The issues go well-beyond noncompetes in my view. Judge Brown also found the proposed noncompete rule to be a "categorical ban" that violates the Administrative Procedure Act due to its "one-size-fits-all approach with no end date." This case is one to watch as it could have a major impact on the scope of the FTC's rulemaking authority going forward.
This article is presented for informational purposes only and is not intended to constitute legal advice.
