Unless something changes, almost all employers, except those few named in the Texas case discussed below, will be covered by FTC’s non-compete ban. Of course, there is a good chance that something will change between now and September 4, 2024. Also, if Trump wins the election, it is virtually certain that he will seek to undo the actions of the FTC, so anyone who opposes non-competes should support the Democrats.
On July 3, 2024, U.S. District Judge Ada Brown of the Northern District of Texas granted a preliminary injunction stopping the FTC from enforcing its rule banning non-compete agreements but this injunction applies only to the plaintiffs involved in the case, including Ryan LLC, the U.S. Chamber of Commerce, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce. Judge Brown found a likelihood that the plaintiffs would succeed in their argument that the FTC lacks the statutory authority to issue the non-compete ban and that the FTC's action might be considered arbitrary and capricious under the Administrative Procedure Act. A final decision on this matter is expected by August 30, 2024. It is not clear if Judge Brown will seek to make her final ruling broader than these initial plaintiffs.
In another ongoing case, ATS Tree Services, LLC v. Federal Trade Commission, in the Eastern District of Pennsylvania, an initial decision is expected by July 23, 2024. This case could further impact the enforceability of the FTC’s rule but the initial belief is that the Pennsylvania judge might view the issues differently than the judge in Texas.
These legal battles have significant implications for employees across the country. Non-compete agreements have long been criticized for limiting workers' mobility and their ability to seek better job opportunities. The FTC's rule aimed to address these concerns by banning nearly all non-compete agreements, thereby empowering employees to freely pursue new job opportunities without fear of legal repercussions. If the courts ultimately uphold the FTC's rule, it would represent a significant victory for employee rights, enhancing job mobility and fostering a more competitive labor market.
If the FTC's rule goes into effect, employees across the country would benefit from increased freedom to change jobs and negotiate better terms of employment. This would not only improve individual career prospects but also promote overall economic growth by enabling a more dynamic and competitive labor market. Workers should be prepared to take advantage of these potential changes by updating their resumes, networking, and exploring new job opportunities.
In the meantime, employees who are currently subject to non-compete agreements should seek legal advice to understand their rights and options. Legal counsel can provide guidance on the potential impact of the ongoing legal battles and help workers navigate any changes that may arise. Additionally, employees should remain proactive in advocating for their rights and supporting initiatives and political candidates that promote fair and equitable labor practices.