As we predicted, on August 20, 2024, the U.S. District Court for the Northern District of Texas permanently blocked enforcement of the Federal Trade Commission’s (FTC) Non-Compete Rule, ruling that the FTC had exceeded its authority and that it was arbitrary and capricious due to the overbroad nature of the rule. The rule was set to take effect on September 4, 2024.
Despite the ruling, the FTC has indicated it will continue to pursue individual enforcement actions. The FTC will no doubt appeal the ruling.
What does this mean for employers?
- Employers do not need to notify employees about their non-compete agreements no longer being enforceable.
- Restrictive covenant agreements will remain governed by state and local laws.
For more information on the enforceability of restrictive covenants, please contact Krevolin & Horst attorneys Kana Caplan or Jack Cartwright at 404-888-9700.
