It was only a matter of time before a federal court blocked the FTC's noncompete rule, which would have banned virtually all noncompete agreements on a federal level. The odds were high it would be a Texas federal court, and also high that it would be a nationwide injunction.
That's exactly what happened yesterday.
Judge Ada Brown of the U.S. District Court for the Northern District of Texas entered a nationwide injunction blocking the rule from taking effect a mere 15 days before its effective date.
What does this mean? If you had plans in place to comply with the FTC's ban by its Sept. 4 effective date, you can now safely scrap those plans. We will assume that the 5th Circuit Court of Appeals and perhaps SCOTUS will have the final say on this issue, but given their current composition I would not expect a different result.
That said, this issue is not going away. Four states already prohibit all employment-related non-compete agreements, and other nine (plus D.C.) limit them based on income. States will continue to expand these prohibitions, and Congress may eventually have its say on the federal level. But for now, any efforts to end all non-competes by administrative fiat are D.O.A.
Judge Ada Brown of the U.S. District Court for the Northern District of Texas entered a nationwide injunction blocking the rule from taking effect a mere 15 days before its effective date.
What does this mean? If you had plans in place to comply with the FTC's ban by its Sept. 4 effective date, you can now safely scrap those plans. We will assume that the 5th Circuit Court of Appeals and perhaps SCOTUS will have the final say on this issue, but given their current composition I would not expect a different result.
That said, this issue is not going away. Four states already prohibit all employment-related non-compete agreements, and other nine (plus D.C.) limit them based on income. States will continue to expand these prohibitions, and Congress may eventually have its say on the federal level. But for now, any efforts to end all non-competes by administrative fiat are D.O.A.