Court Orders Limited Injunction Against FTC Enforcement of Non-Compete Regulations

Topics: Court Decisions, Legal Information, Non-Compete and Trade Secrets

Judge Brown of the United States District Court for the Northern District of Texas issued a much anticipated Preliminary Injunction to stay the September 4, 2024 effective date of the FTC’s announced ban on non-compete agreements in the employment sector and to enjoin enforcement against the Plaintiffs that filed the case.

However, the injunction does not reach most employers in the United States as it is limited to the named plaintiffs, Ryan, LLC and Plaintiff-Intervenors Chamber of Commerce of the United States of America, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce. The Court goes to great lengths to clarify that the injunction is not a nationwide injunction and does even not apply to members of any of the intervenors.

The Court’s 33-page ruling also indicated that a separate order will specify the terms of the injunctive relief in more detail. Moreover, the Court indicated that it intends to make a final order potentially disposing of the case by August 30, 2024.

While it is possible that greater relief may be forthcoming to most employers in the United States (if other courts follow the reasoning adopted by Judge Brown or if Judge Brown’s final disposition order has a wider impact), that time has not arrived. Therefore, any employer that utilizes non-compete agreements with employees should consult with counsel, such as Dan M. Forman and Ashley Halberda of CDF’s Unfair Competition and Trade Secret Practice group for advice about preparing to give notices and other restrictions that the FTC sought to impose. Click here for more details about the regulations.