On August 20, 2024, in Ryan v. Federal Trade Commission, the U.S. District Court for the Northern District of Texas set aside the Federal Trade Commission’s Non-Compete Rule. As we reported earlier, the Rule purported to ban most non-competes in employment and was set to take effect in early September. In ruling on dueling motions for summary judgment filed by the parties, the Court set aside the Rule, and ordered that the Rule is not to be enforced. The ruling applies to employers nationwide.

Employers that have entered into non-compete agreements with employees can breathe a sigh of relief, knowing that the Rule will not go into effect, for now. It is anticipated that the FTC will appeal to the U.S. Court of Appeals for the Fifth Circuit, and then possibly to the U.S. Supreme Court.

Employers should note, however, that even without the Rule, the FTC still has the authority to challenge specific non-compete agreements under federal antitrust law, and various state laws still govern non-compete clauses. Employers are still advised to consider the panoply of measures to protect their confidential and proprietary information, and carefully limit their non-compete clauses to comply with applicable laws.