A Texas federal judge recently struck down the Federal Trade Commission’s (FTC) nationwide ban on non-compete agreements, a rule that was set to take effect on September 4, 2024. The case, Ryan LLC v. FTC, was brought before the Northern District of Texas, where Judge Ada Brown ruled that the FTC exceeded its authority under the FTC Act by trying to implement such a sweeping ban. The court found that the FTC did not have the statutory authority to issue binding rules on unfair methods of competition, and even if it did, the rule was deemed “arbitrary and capricious” for its broad, one-size-fits-all approach.
At this point, the Court’s decision maintains the status quo of state laws regarding non-competes. It is anticipated that the FTC is likely to appeal the decision, meaning the legal battle may continue into 2025.
