![](\"https:\/\/s3.amazonaws.com\/snd-store\/a\/101002715\/08_29_24_etra12_560x292.jpg\")
<\/p>\n<\/p>\n
In April\u00a02024, the Federal Trade Commission (FTC) approved a final rule prohibiting most noncompete agreements with employees. The ban was scheduled to take effect on September\u00a04, 2024, but ran into multiple court challenges. Now the court in one of those cases has knocked down the rule, leaving its future uncertain.<\/p>\n
The FTC ban <\/strong><\/p>\n The FTC\u2019s rule would have prohibited noncompetes nationwide. In addition, existing noncompetes for most workers would no longer be enforceable after it became effective. The rule was expected to affect 30\u00a0million workers.<\/p>\n The rule includes an exception for existing noncompete agreements with \u201csenior executives,\u201d defined as workers earning more than $151,164 annually who are in policy-making positions. Policy-making positions include:<\/p>\n Employers couldn\u2019t enter new<\/em> noncompetes with senior executives under the new\u00a0rule.<\/p>\n Unlike an earlier proposed rule issued for public comment in January\u00a02023, the final rule didn\u2019t require employers to legally modify existing noncompetes by formally rescinding them. Instead, they were required only to provide notice to workers bound by an existing agreement \u2014 other than senior executives \u2014 that they wouldn\u2019t enforce such agreements against the workers.<\/p>\n Legal challenges<\/strong><\/p>\n On the day the FTC announced the new rule, a Texas tax services firm filed a lawsuit challenging the rule in the Northern District of Texas (Ryan, LLC v. Federal Trade Commission<\/em>). The U.S. Chamber of Commerce and similar industry groups joined the suit in support of the plaintiff. Additional lawsuits were filed in the Eastern District of Pennsylvania (ATS Tree Services, LLC v. Federal Trade Commission<\/em>) and the Middle District of Florida (Properties of the Villages, Inc. v. Federal Trade Commission<\/em>).<\/p>\n The Ryan<\/em> case is the first to reach judgment. On August\u00a020, 2024, the U.S. District Court for the Northern District of Texas held that the FTC exceeded its authority in implementing the rule and that the rule was arbitrary and capricious. It further held that the FTC cannot enforce the ban, a ruling that applies on a nationwide basis.<\/p>\n Notably, in July\u00a02024, the U.S. District Court for the Eastern District of Pennsylvania denied the plaintiff\u2019s request for a preliminary injunction and stay of the rule\u2019s effective date. It found the plaintiff didn\u2019t establish that it was reasonably likely to succeed in its argument against the ban. By contrast, on August\u00a014, 2024, the U.S. District Court for the Middle District of Florida granted the plaintiff a preliminary injunction and stay. That plaintiff requested relief only for itself, though, not nationwide. But the Ryan<\/em> ruling means the FTC can\u2019t enforce the ban at all unless it prevails on appeal.<\/p>\n An appeal would be before the conservative U.S. Court of Appeals for the Fifth Circuit, which has become a favorite destination for challenges to President Biden\u2019s policies. Although the court often sides with the challengers, it\u2019s also regularly been reversed by the U.S. Supreme\u00a0Court.<\/p>\n An FTC appeal could face an uphill battle regardless, though, in light of a recent Supreme Court ruling that reversed the longstanding doctrine of \u201cChevron<\/em> deference.\u201d Under that precedent, courts gave deference to federal agencies\u2019 interpretations of the laws they administer. According to the new ruling, however, it\u2019s now up to courts to decide \u201cwhether the law means what the agency\u00a0says.\u201d<\/p>\n The bottom line<\/strong><\/p>\n For now, the FTC\u2019s noncompete ban remains in limbo and won\u2019t take effect on September\u00a04, 2024. But that doesn\u2019t mean noncompetes aren\u2019t still vulnerable to attack. For example, some private parties are using anti-trust laws to challenge such agreements. And an FTC spokesperson has indicated that the Ryan<\/em> ruling won\u2019t deter the agency \u201cfrom addressing noncompetes through case-by-case enforcement actions.\u201d<\/p>\n \u00a9 2024<\/em><\/p>\n <\/body> In April\u00a02024, the Federal Trade Commission (FTC) approved a final rule prohibiting most noncompete agreements with employees. The ban was scheduled to take effect on September\u00a04, 2024, but ran into multiple court challenges. Now the court in one of those cases has knocked down the rule, leaving its future uncertain. The FTC ban The FTC\u2019s […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,59,10],"tags":[8,11,12],"class_list":["post-16966","post","type-post","status-publish","format-standard","hentry","category-articles","category-etra","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16966","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=16966"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16966\/revisions"}],"predecessor-version":[{"id":16967,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16966\/revisions\/16967"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=16966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=16966"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=16966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n<\/html><\/p>\n","protected":false},"excerpt":{"rendered":"