FTC’s Ban on Noncompete Agreements Struck Down
The U.S. District Court for the Northern District of Texas on August 20, 2024, struck down the Federal Trade Commission’s (FTC’s) proposed ban on noncompete agreements.
As a result, the FTC’s proposed ban on noncompete agreements will not be enforced or take effect on September 4, 2024, as intended.
Judge Ada E. Brown ruled that the FTC did not have the authority to ban noncompete agreements, and the FTC’s rule was arbitrary and capricious.
The FTC’s ban would have covered almost all existing and new noncompete agreements for employees. In addition, the FTC’s ban would have prohibited employers from creating new noncompete agreements with “senior executives,” defined as people earning more than $151,164 annually, who are in a “policymaking position.”
It should be noted that the court's decision does not prevent the FTC from addressing noncompete agreements on a case-by-case basis.
It will remain to be seen whether the FTC will appeal the court's decision.
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