Earlier today, the Federal Trade Commission (FTC) filed notice that it will appeal a Texas federal court decision that enjoined the FTC’s final rule barring the use of most noncompete agreements. In an August 20, 2024 decision, Judge Ada Brown of the U.S. District Court for the Northern District of Texas ruled that the FTC’s ban on noncompete agreements exceeded its legal authority. The final rule was slated to go into effect September 4; however, Brown’s decision vacated the regulation on a nationwide basis. The FTC has argued that the noncompete ban – issued in April after a 3-2 party-line commission vote – falls squarely within its mandate to block “unfair methods of competition” through enforcement and rulemaking. The FTC will appeal the case in the U.S. Court of Appeals for the Fifth Circuit.
