10 Sep 2024

Will They? Won’t They? Adapting to the Court Stay on the FTC’s Noncompete Ban

On August 20, 2024, the Northern District of Texas issued its final ruling in Ryan, LLC. v. FTC on the merits of summary judgment cross-motions, contesting the legality of the Federal Trade Commission’s NonCompete‑ Rule which would prohibit most employee non-compete agreements. The rule was scheduled to become effective on September 4, 2024. In its order, the District Court vacated the Non-Compete Rule with nationwide effect, finding that  (1) the FTC lacked statutory authority to engage in substantive—rather than mere ''housekeeping''—rulemaking with respect to unfair methods of competition, exceeding its statutory authority, and (2) the Non-Compete Rule is arbitrary and capricious in that it is overbroad without sufficient supporting rationale, in violation of the Administrative Procedure Act (5. U.S.C. 701 et seq.). Review our Client Alert Digest on the topic.

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