A Texas federal judge has struck down the Federal Trade Commission’s (FTC) recent rule banning post-separation non-compete agreements nationwide. The ban was originally slated to go into effect on September 4th, but employers can now continue to maintain non-competes as their state laws allow.
Judge Ada Brown of U.S. District Court for the Northern District of Texas ruled that the antitrust agency lacked authority to issue substantive rules related to unfair methods of competition, including the noncompete rule, which would have prohibited companies from restricting their employees’ ability to work for rivals. There is a slight chance the rule could be resurrected as it has been reported that the FTC is seriously considering a potential appeal which would be initially heard by the 5th Circuit Court of Appeals.
For more information, contact Claiborne Guy at claiborne.guy@agc.org or 703-837-5382.