Compliance Stuff

On October 18, 2024, the Federal Trade Commission (“FTC”) gave notice that it would appeal a Texas federal court’s decision halting its non-compete rule (the “Rule”) from taking effect as to all employers nationwide. The appeal sets the stage for a decision by the conservative Fifth Circuit, which has become a key battleground for challenges to federal rules.  In August, in  Ryan LLC v. Federal Trade Commission , No. 3:24-cv-00986-E (N.D.Tex.), the United States District Court for the Northern District of Texas  enjoined enforcement  of the Rule nationwide, preventing it from taking effect as intended on September 4, 2024. T he court found that the FTC lacked authority to issue the Rule under the FTC Act, and that the near-complete ban on noncompetes imposed by the Rule was arbitrary and capricious.  On similar grounds, the Florida federal court in  Properties of the Villages Inc. v. Federal Trade Commission,  No. 5:24-cv-00316 (M.D.Fla), issued ...

  On August 20, 2024, in   Ryan LLC v. Federal Trade Commission , No. 3:24-cv-00986-E (N.D. Tex.), the United States District Court for the Northern District of Texas granted summary judgment to the p laintiffs and ordered the Federal Trade Commission’s (“FTC”) non-compete rule (the “Rule”) to be set aside with respect to all employers nationally and that it shall not be enforced or take effect on September 4, 2024. The FTC may immediately appeal the court’s decision to the Fifth Circuit. Repeating the same reasoning it reached in granting a  preliminary injunction  on July 3, 2024, the court held that: ( 1) the FTC exceeded its statutory authority in issuing the Rule; and (2) the Rule was arbitrary and capricious under the Administrative Procedures Act (“APA”).  The court found that Section 6(g) of the FTC Act, which the FTC relied on to issue the Rule, does not grant it authority to issue substantive rules, but is instead a “housekeeping statute,” which only a...