On April 25, 2024, the Federal Trade Commission (FTC) issued a ban on noncompete agreements, poised to go into effect on September 4, 2024. The ruling was swiftly met with lawsuits challenging the FTC’s authority to enforce such a ban. Nearly three months later the FTC continues playing whack a mole against federal courts calling the ruling into question.
In July the U.S. District Court for the Northern District of Texas held that the FTC did not have the power to issue a ruling to prevent “unfair methods of competition,” which the noncompete ruling would fall under. However, a U.S. district court out of Pennsylvania later preliminarily ruled that the FTC was within its bounds to implement a noncompete ban. More federal courts are expected to issue their preliminary rulings on the matter prior to the September effective date. The U.S. Supreme Court is also expected to weigh in on the matter.
While the ruling has a bumpy road ahead, employers should remain vigilant for updates and be prepared if the September 4 effective date is upheld. Review any current noncompete policies or agreements in place and determine a list of former and current employees who would need to receive required notices.
Bukaty Companies will continue to monitor the situation and provide updates as needed.