On August 20, 2024, a Texas federal court issued an injunction stopping the Federal Trade Commission’s (FTC) new non-compete regulation from taking effect on September 4.
See Freeing Enterprise: FTC Prohibits Employee Noncompetes (May 17, 2024).

Judge Ada Brown concluded the FTC overstepped its authority, calling the new rule arbitrary, capricious and groundless.

With several other district courts also addressing this regulation – one has already upheld it — it will take the appeals courts, possible the U.S. Supreme Court, to resolve the issue.

For California-only employers, they can go back to their long-familiar California non-compete ban (see, Non-Compete No Nos [November 3, 2023]) and not worry about any differences between California and federal law.

Take-Aways:

Stay tuned for the next episode in FTC vs the federal courts. In the meantime, employers do not have to follow the federal non-compete ban.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Friction-Resistant Workplace: Workplace Policy Handbook & Forms for 2024 (August 8, 2024)
• Sacramento Love Letter: Mandatory Non-Compete Notices Due February 14, 2024 (February 9, 2024)

Helena Kobrin
August 23, 2024