Employment Law Alert: Federal Court Blocks FTC Rule Against Noncompetes Nationwide

As an update to a topic we discussed in our 2024 Mid-Year California Employment Law Update, a federal district court in Texas recently ordered that the Federal Trade Commission's new rule against noncompete agreements shall not be enforced or otherwise take effect on September 4, 2024 or thereafter. Ryan LLC v. FTC (N.D. Texas 2024). Apart from the FTC rule no longer invalidating most noncompete agreements, the court's decision also means that employers are no longer required to send written notices to current and former employees by September 4, 2024 that their affected noncompetes could not and would not be enforced. While the federal district court's ruling was final (not preliminary), it is subject to review by federal appellate courts.

The court's ruling does not affect California's longstanding general prohibition of employer-employee noncompete agreements, or California's existing state law requirement to provide written notice to current and former employees of the invalidity of any noncompete agreements that they had signed onto. The ruling also does not affect the state laws in a growing number of other states that restrict or prohibit employee noncompete agreements.

Employers seeking further guidance may contact any of the firm’s attorneys.