FTC Noncompete Rule Blocked by Federal Court
There’s been a recent development regarding the FTC’s noncompete rule. On April 23, 2024, the FTC finalized a rule banning noncompete agreements for most employees, effective September 4, 2024. However, a federal judge in Texas has blocked the FTC’s rule, preventing it from taking effect. The FTC may appeal the ruling, and the case could ultimately reach the U.S. Supreme Court.
The future of the FTC’s actions remains uncertain, but the Texas judge’s decision allows existing noncompete agreements to remain in place, and the enforceability of noncompete agreements will continue to be evaluated on a state-by-state basis.
Given the likelihood of ongoing legal challenges to noncompete agreements, businesses should consider evaluating their existing plans to protect competitive and confidential information. This may involve strengthening nondisclosure agreements, non-solicitation clauses, and other contractual safeguards.