FTC noncompete ban partially halted, remains largely intact for most employers

On July 3, 2024, a judge in the Northern District of Texas issued a preliminary court order that temporarily blocks the Federal Trade Commission (FTC) from implementing its noncompete ban but only for the specific employer groups that filed the suit.

Limited relief

The court’s ruling prohibits enforcement of the FTC’s final rule, which would essentially ban all noncompete agreements as of September 4, 2024, with limited exceptions. As a result, the FTC is only prohibited from implementing and enforcing the final rule against Ryan, LLC, and several employer groups, including the U.S. Chamber of Commerce, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce.

The court specifically declined to extend a broader order preventing the ban’s implementation, stating that the groups failed to demonstrate the necessary associational standing because they hadn’t addressed associational standing issues in their briefing. The court also didn’t issue a nationwide order, as some experts anticipated.

As a result, the noncompete ban remains imminent for most U.S. companies. However, District Judge Ada Brown indicated, “While this order is preliminary, the Court intends to rule on the ultimate merits of this action on or before August 30, 2024.” Many believe there will be a significant effort between now and the end of August to persuade the judge to expand the order nationwide.