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On August 20, 2024, a federal court issued an order permanently setting aside the Federal Trade Commission's ("FTC") rule that would have largely banned noncompetition agreements between employers and employees.
On August 20, 2024, a federal court issued an order permanently
setting aside the Federal Trade Commission's ("FTC")
rule that would have largely banned noncompetition agreements
between employers and employees. Judge Ada Brown found that the FTC
lacked the authority to promulgate the rule, and that it was
"arbitrary and capricious" because it was
"unreasonably overbroad without a reasonable
explanation." Barring a successful appeal, the FTC cannot
enforce the non-compete ban against any employers.
This comes as welcome news for employers who faced much
uncertainty over the past year and a half since the FTC proposed
the rule. Employers should remain cognizant of state-level
restrictions and prohibitions on noncompetition agreements. But for
now, the status quo prevails.
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