Non-Compete Ban Update

On Wednesday, July 3, a federal judge in Dallas granted a request for an injunction temporarily blocking the Federal Trade Commission's (FTC) upcoming rule (set to take effect on September 4th), which would ban non-compete agreements in almost all employment contexts. Take notice of the judge's stance on several key issues:

  1. The judge agreed that the plaintiffs had shown a likelihood of success on their claims.
  2. She stopped the FTC from enforcing the new rule against the plaintiffs until she issues a decision on the merits and promised she would do so no later than August 30.
  3. Despite granting relief to the plaintiffs, the judge did not extend the injunction nationwide at this time. In other words, at least for now, no one benefits from the injunction except the plaintiffs in this particular case.

For now, non-compete agreements remain valid and enforceable. But until a broader decision is made by this court or another, employers across the country remain uncertain about whether they will be forced to comply with the FTC’s rule in September. While the initial ruling suggests potential hurdles for the FTC's new rule, clarity for employers remains elusive. In the weeks ahead, employers might hope to see developments in other pending lawsuits or further action by the federal court in Dallas, including a possible extension of the injunction barring the FTC’s rule nationally.

Stay tuned, and we’ll keep you posted.

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