FTC Non-Compete Ban Blocked from Enforcement Nationwide

On August 20, 2024, Judge Ada Brown of the Northern District of Texas ruled in Ryan LLC v. Federal Trade Commission that the Federal Trade Commission (“FTC”) did not have the authority to issue its non-competition ban that was scheduled to take effect on September 4, 2024.

Unlike previous decisions which were limited in application to only the parties in the case at hand, the Ryan decision strikes down the non-compete ban for all employers across the country.

While the Firm can’t predict the future, we don’t anticipate a successful appeal of the decision by the FTC. An FTC appeal would go to the business-friendly 5th Circuit Court of Appeals which is likely to uphold the Ryan decision. From there, a subsequent appeal would be to the US Supreme Court, which is again likely to uphold the Ryan decision given the current Court’s precedents ruling against administrative agencies.

What does this mean for employers?

With the FTC noncompete ban struck down, employers can continue to use their current restrictive covenant agreements, including non-compete provisions, as long as they are compliant with state laws.

The FTC responded to the Ryan ruling saying the “decision does not prevent the FTC from addressing non-competes through case-by-case enforcement actions.” So, we suggest employers review their current agreements and evaluate who is subject to them, and their enforceability on a state by state basis.

If you have any questions on how this ruling affect you or your business please don’t hesitate to reach out: TCremer@BarbasCremer.com .