Status:

In a win for ABC members, on Aug. 20, the U.S. District Court for the Northern District of Texas blocked the Federal Trade Commission from implementing its rule to ban noncompete agreements. The court found that the FTC lacked statutory authority to promulgate the rule and that the rule is arbitrary and capricious. This means the rule will not be enforced or otherwise take effect on Sept. 4, 2024.

As expected, on Oct. 18, the FTC appealed the court’s Aug. 20 decision. ABC will continue to monitor the litigation and provide any updates in Newsline. But for now, the Aug. 20 decision will remain in effect during the pendency of the appeal.

On July 3, the U.S. District Court for the Northern District of Texas issued a limited preliminary injunction and stay of the FTC’s rule.

On May 14, ABC joined a broad group of trade associations in filing an amicus brief in support of the plaintiffs’ request for injunctive relief against the FTC’s final rule to ban noncompete clauses.

Desired Outcome:

ABC is extremely pleased with the court’s decision and has consistently stated that ABC members have valid business justifications for utilizing noncompete agreements, such as protecting confidential information and intellectual property. The new rule would have had a harmful effect on member companies as well as their employees, forcing employers to rework their compensation and talent strategies.