BREAKING: Federal Judge Strikes Down FTC Non-Compete Ban
On August 20, 2024, a federal court struck down the FTC’s Rule banning most Non-Compete Agreements.
WHAT DID THE COURT DECIDE?
The U.S. District Court for the Northern District of Texas granted summary judgment to the plaintiff, Ryan LLC, in its case challenging the FTC’s rule banning most non-compete agreements, holding:
- that the FTC promulgated the Non-Compete Rule in excess of its statutory authority, and
- the FTC Non-Compete Rule is arbitrary and capricious because (a) the FTC based the Rule on inconsistent and flawed empirical evidence, failing to consider the positive benefits of non-compete agreements, and disregarding the substantial body of evidence supporting such agreements; and (b) the FTC failed to sufficiently address alternatives to issuing the Rule.
The Order strikes down the rule and prevents it from taking effect on September 4, 2024 and applies nationwide.
MAY THE FTC APPEAL?
The FTC may, and likely will, appeal the court’s decision. However, the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, No. 22-451 (2024) may make the appeal more difficult because federal agencies are no longer afforded dereference to their interpretation of their own power.
If you have questions about this information, please contact our office at (404) 365-5682 or email Jarrett Martin at jmartin@ttmlawyers.com.
This information is for general information purposes and is not intended to provide specific legal advice nor is it intended to create an attorney-client relationship with Thompson | Thompson | Martin.
