Today, a federal district court in Texas granted, in part and only as to certain named parties, a motion to stay and enjoin the Federal Trade Commission (FTC) from implementing or enforcing its controversial rule banning post-employment noncompete agreements until the matter has been fully decided on the merits. The court plans to render a decision on or before August 30, 2024. Additional legal challenges are underway, and the focus has now shifted to a federal court action pending in the Eastern District of Pennsylvania, where the court is expected to rule on a motion to stay and preliminarily enjoin the FTC rule from taking effect. A decision is expected by July 23, 2024.
As detailed in our previous client alert published on April 26, 2024, the FTC rule is still set to take effect nationwide on September 4, 2024. It prohibits for-profit employers from entering into noncompete agreements with workers (including employees, independent contractors, and volunteers) and invalidates existing noncompetes with limited exceptions.
We will continue to monitor and report on any additional developments following this partial stay and preliminary injunction. Fenwick lawyers are available to answer questions about the rule, its present implications, and how to comply with current state laws regulating and restricting noncompete agreements.