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Employers Exhale: FTC Non-Compete Rule Invalidated
A Texas Federal Judge recently struck down the Federal Trade Commission’s (FTC) rule banning non-compete agreements nationwide.
In the much-anticipated ruling, Judge Ada Brown, a district judge for the Northern District of Texas, found that the agency exceeded its authority with the ban, which would have rescinded contracts that prevent workers from moving to competing companies. Now, existing non-compete agreements and clauses are still enforceable, and employers do not need to notify employees that their non-competes are no longer valid.
Since its publication earlier this year, the rule has been subject to various legal challenges, with mixed results.
This latest ruling is far from a settled matter – and it remains to be seen whether the FTC will appeal the Texas decision.
However, on September 4 all non-competes will still be enforceable. While the immediate impact of the pending deadline has eased, companies using non-competes should still consider evaluating the legal risks of enforcing them as the issue works its way through the appellate system.
CGS3 attorneys Phil Jelsma and Ulrick Matsunaga recently summarized the recent ruling and other legal challenges to the FTC’s non-compete ban in an article written for The Daily Journal and The Daily Transcript.
The full article can be read in The Daily Journal here and The Daily Transcript here (subscriptions required).