Federal Court Temporarily Blocks FTC’s Controversial Noncompete Rule

July 11, 2024

What's New

The U.S. District Court for the Northern District of Texas issued an order temporarily blocking the Federal Trade Commission from enforcing its controversial new noncompete rule against the U.S. Chamber of Commerce and the other plaintiffs who filed a lawsuit to invalidate it.

The rule prohibits most noncompete agreements that restrict workers from taking a new job or starting a new business that could compete with the worker’s former employer.

The court’s July 3, 2024, order in Ryan LLC v. Federal Trade Commission prohibits the FTC from enforcing the rule until the court rules on the merits. The court said it will do so by August 30, 2024, before the rule’s scheduled effective date of September 4, 2024. The injunction covers only the plaintiff organizations and does not extend to their members.

What It Means

Based on the court’s rationale for issuing the temporary stay, it is highly likely that the court will decide against the rule on the merits, setting up a likely appeal. The rule is also under challenge in the U.S. District Court for the Eastern District of Pennsylvania, where a ruling is likely before the end of July.

What You Should Do

Follow CWC as we provide information about future developments on this issue. CWC members can discuss this case with our staff and fellow CWC members at one of our Conversation Corners.

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