On July 3, a Federal Court in Texas issued a preliminary injunction halting the implementation of the FTC’s Non-Compete Rule. However, the Order applies only to the named Plaintiffs in the Texas case. The Texas court is expected to issue a final ruling on August 30. The Court found the FTC lacks the statutory authority to issue substantive rulemaking regarding unfair methods of competition.
It is still uncertain as to whether the final ruling will have a broader ban on the FTC from implementing its ruling for all employers nationwide. There is another case pending in the Eastern District of Pennsylvania with a ruling expected at the end of July. Therefore, it still remains uncertain as to whether the FTC rule will go into effect on September 4.
For background on the FTC’s Non-Compete Rule, see our May 2024 Employment Law Update.