Court direction on FTC’s noncompete ban expected this summer

The U.S. District Court for the Eastern District of Texas has issued an aggressive scheduling order that “should allow prompt resolution of” one of the initial challenges to the Federal Trade Commission’s (FTC) noncompete ban, “with sufficient time, before the rule’s effective date, for . . . appellate review.” Briefing under the court’s schedule will be completed by June 19, 2024. The court will presumably rule on the request to stop the rule shortly after that to allow for appellate review before the rule’s effective date, which will likely be in September 2024 (120 days after the ban is published in the Federal Register).

FTC’s noncompete rule

The FTC’s noncompete rule is very broad and bans almost all noncompetes in for-profit businesses, subject to limited exceptions like noncompetes between franchisors and franchisees and noncompetes executed in conjunction with the sale of certain businesses. The rule doesn’t apply to nonprofit organizations, over which the FTC doesn’t have jurisdiction.

The ban on noncompetes applies to senior executives, whom the rule defines as workers earning more than $151,164 annually who are in policymaking roles. However, the rule allows existing noncompetes for senior executives to remain in force.