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Limited Injunction Halts FTC Noncompete Ban

Earlier today, the U.S. District Court for the Northern District of Texas granted a motion for a preliminary injunction of the Federal Trade Commission’s new rule prohibiting noncompete clauses in the employment context (the “FTC Ban”) with respect to the Plaintiff and Plaintiff-Intervenors in that case only. It declined to expand the injunction nationwide. The Court additionally committed to ruling on the ultimate merits of the case on or before August 30, 2024.

This ruling means the anticipated September 4, 2024, implementation date of the FTC Ban will stand for all other entities. In other words, the following restrictions will apply starting on September 4, 2024:

  1. Noncompete agreements entered into on or after the effective date – all such agreements will be unenforceable, regardless of the position held or the salary earned by the worker.
  2. All existing noncompete agreements – i.e. those entered into prior to the Final Rule’s effective date – all such agreements will be unenforceable with the exception of noncompete agreements entered into with “senior executives”. The rule defines this term to refer to workers earning more than $151,164 annually who are in a “policy-making position.”

There is still a possibility that another court will entertain a different motion for preliminary injunction before September 4 or that this court will enter a final, nationwide injunction against enforcement by August 30. At the very least, we anticipate significant, continuing legal battles over the Federal Trade Commission’s statutory authority to promulgate this rule, as well as the very broad scope of the FTC Ban itself. Although the FTC does not have authority over certain common carriers engaged in common carrier activities, with the sunset of the ICC and the elimination of the distinction between common carrier and contract carrier authorities issued by the U.S. Department of Transportation, the extent to which the FTC Ban applies to motor carriers is unclear. The Firm is continuing to monitor these developments closely.

We encourage clients to reach out for further guidance. For more information, please contact David RobinsonJack FinkleaDon VogelSari Pettinger, or Alaina Hawley.

 

News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.

Limited Injunction Halts FTC Noncompete Ban

Earlier today, the U.S. District Court for the Northern District of Texas granted a motion for a preliminary injunction of the Federal Trade Commission’s new rule prohibiting noncompete clauses in the employment context (the “FTC Ban”) with respect to the Plaintiff and Plaintiff-Intervenors in that case only. It declined to expand the injunction nationwide. The Court additionally committed to ruling on the ultimate merits of the case on or before August 30, 2024.

This ruling means the anticipated September 4, 2024, implementation date of the FTC Ban will stand for all other entities. In other words, the following restrictions will apply starting on September 4, 2024:

  1. Noncompete agreements entered into on or after the effective date – all such agreements will be unenforceable, regardless of the position held or the salary earned by the worker.
  2. All existing noncompete agreements – i.e. those entered into prior to the Final Rule’s effective date – all such agreements will be unenforceable with the exception of noncompete agreements entered into with “senior executives”. The rule defines this term to refer to workers earning more than $151,164 annually who are in a “policy-making position.”

There is still a possibility that another court will entertain a different motion for preliminary injunction before September 4 or that this court will enter a final, nationwide injunction against enforcement by August 30. At the very least, we anticipate significant, continuing legal battles over the Federal Trade Commission’s statutory authority to promulgate this rule, as well as the very broad scope of the FTC Ban itself. Although the FTC does not have authority over certain common carriers engaged in common carrier activities, with the sunset of the ICC and the elimination of the distinction between common carrier and contract carrier authorities issued by the U.S. Department of Transportation, the extent to which the FTC Ban applies to motor carriers is unclear. The Firm is continuing to monitor these developments closely.

We encourage clients to reach out for further guidance. For more information, please contact David RobinsonJack FinkleaDon VogelSari Pettinger, or Alaina Hawley.

 

News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.