Compliance Stuff

On Friday, September 5, 2025, the Federal Trade Commission (FTC or the Commission) brought its multiyear effort to ban employee noncompete agreements to a conclusion . As readers of this blog will certainly remember,  in April 2024 , the FTC voted to adopt a regulation (the  Noncompete Rule  or the Rule) that would have banned the great majority of employee noncompete agreements across the country. The Noncompete Rule was immediately challenged in court and, in August 2024, a  federal court in Texas  held the Noncompete Rule unlawful and issued a broad order vacating the Rule in its entirety. The FTC appealed that decision to the Fifth Circuit Court of Appeals but, given the subsequent change in presidential administrations, it was  long anticipated  that the Trump-Vance FTC was likely to abandon its efforts to defend the Biden-era Noncompete Rule. On September 5, these expectations came to fruition, as the FTC finally and definitively announced its ...

  The federal government has filed motions to stay two ongoing appeals of rulings that blocked the Federal Trade Commission’s (FTC) rule banning noncompete agreements. Quick Hits The Trump administration is seeking to pause the FTC’s pursuit of appeals of two district court decisions that blocked the FTC’s rule banning noncompetes, suggesting an expected shift in the government’s approach to the rule. Despite the motions to stay, and though the FTC may not pursue any further formal rulemaking on the issue, FTC Chairman Andrew N. Ferguson is continuing to emphasize his view that noncompete agreements potentially harm competition in labor markets. The Government’s Motions On April 23, 2024, the Biden-era FTC under then-Chair Lina Khan  voted 3–2 to adopt a final rule  that would have banned nearly all noncompete agreements in employment. The vote split along party lines, with both Republican commissioners voting against it. In a dissenting statement issued on June 28, 2024,...

  Summary What’s next for employers who want to protect their businesses from competition from departing employees, including the loss of customers, employees, and confidential information? With a federal court injunction against the Federal Trade Commission’s (FTC) Final Rule banning noncompetes, the door is open for employers to continue using them . But companies now have time to reflect on the increasing hostility of courts and legislatures towards overly broad restrictive covenants, update their existing agreements, assess which employees ought to be subject to post-employment covenants, and determine how to best protect their trade secrets and confidential information. Attorneys in Ballard Spahr’s  Labor and Employment  Group review the current state of federal law, note the growing number of states regulating noncompete agreements, and provide strategic considerations for employers. Nationwide Injunction Just two weeks before the effective date of the FTC noncompe...

 J udge Ada Brown of U.S. District Court for the Northern District of Texas issued an   order   on Tuesday, August 20, 2024, r uling that the FTC Rule establishing a noncompete ban (“the Rule”) is arbitrary and capricious, and issuing a nationwide injunction against its enforcement.   Operative language of the opinion is sweeping, concluding that “(i) the FTC promulgated the Non-Compete Rule in excess of its statutory authority, and (ii) the Rule is arbitrary and capricious, the Court must ‘hold unlawful’ and ‘set aside’ the FTC’s Rule.”  The decision to set aside the Rule has a nationwide effect, prohibiting the FTC’s enforcement on its upcoming September 4, 2024 effective date.  Of course, no notices to employees affected by the rule need go out while the injunction is in place.  We will continue to monitor and provide updates! Source(s): MaynardNexsen, received on August 21, 2024