Federal Judge Strikes Down FTC’s Non-Compete Ban, Which Was Set To Go Into Effect September 4

On August 20, 2024, a Federal Court in Texas struck down the FTC’s nationwide ban on non-compete agreements that was set to take effect on September 4. The Court’s ruling applies to all employers across the country. While it is possible that the FTC may appeal the ruling, it faces significant challenges in doing so, leaving the future of the ban in question.

What Should Employers Do Now?

• Employers who have existing non-compete agreements no longer need to scramble to amend their contracts or notify employees of the change.
• However, New York was already considering a state-wide ban of non-compete agreements and may revisit the issue now that the federal ban has been struck down.
• Employers should therefore be very careful when using non-compete agreements to make sure they are very narrowly tailored to follow existing New York requirements.
• Alternative strategies, such as non-solicitation, confidentiality and “work for hire” clauses can still help employers protect their interests without the need to worry about a new ban to non-compete clauses.

Please feel free to contact me with any questions you have.

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