Status of FTC Noncompete Ban


With the Aug. 20, 2024, nationwide permanent injunction issued by Judge Ada Brown, for the Northern District of Texas federal court, a contentious FTC rule prohibiting the use of most non-compete agreements is not going into effect. The rule is likely to remain in legal limbo until other courts also considering it finalize their rulings and any appeals run their course—which may ultimately involve the U.S. Supreme Court weighing in.

In April, the Federal Trade Commission (FTC) approved a final rule that would largely ban, particularly in the employment context, the use of covenants not to compete, often called “noncompetition agreements” or simply “noncompetes.” That rule (FTC rule) was due to go into effect Sept. 4, 2024.