Federal Judge Blocks FTC Non-Compete Ban

The Federal Trade Commission (“FTC”) had planned to implement a comprehensive ban on non-compete clauses starting September 4, 2024. This rule was designed to prohibit employers from entering into non-compete agreements with workers, including senior executives, to promote fair competition and increase worker mobility.

However, a recent development has altered this course. On August 21, 2024, a federal judge in Texas blocked the FTC’s nationwide ban on non-competes, ruling that the FTC exceeded its statutory authority and did not provide sufficient evidence to justify such a sweeping ban. This decision has put the implementation of the rule on hold, pending further legal proceedings.

This case will likely be appealed to the United States Supreme Court and continue to be litigated until a final determination is made.

While employers need not do away entirely with their non-competes, it is important that moving forward employers be mindful of the enforceability, reasonableness, and narrowness of their non-competes and similarly their non-solicitation agreements.

In Kansas, non-competes reasonable as to time and geographical area remain valid and the Kansas Department of Labor has not issued a position on either the FTC rule or the ban.

We will provide our clients with any updates on this issue as they become available and relevant to the workplace.