
The FTC’s plan to ban non-compete agreements across the country has hit a major roadblock. Originally set to go into effect on September 4, 2024, the rule would have required employers to eliminate non-compete clauses and notify both current and former employees of the change. But recent legal developments have paused this rule for now.
What Happened?
In April 2024, the FTC announced a new rule aimed at banning non-compete agreements nationwide. However, the rule quickly faced multiple legal challenges, with four lawsuits filed against it.
On August 20, 2024, a federal court in Texas delivered a significant ruling in the case Ryan, LLC v. FTC. The court determined that the FTC overstepped its authority in creating the rule, declaring it unlawful and blocking its enforcement across the country. This ruling means employers don’t need to worry about complying with the ban by the original September deadline.
What Should Employers Do Now?
For now, the FTC’s non-compete ban is on hold, giving employers some breathing room. However, this isn’t the end of the story. The ruling may be appealed, and the case could eventually reach the Supreme Court. While the federal ban is paused, it could still come back depending on future court decisions.
In the meantime, it’s important to stay compliant with state laws on non-compete agreements, as these regulations can vary widely. Schedule a consultation with ModHR if you have any questions or hesitations regarding how this may affect your business.
Although the federal ban is temporarily halted, it’s essential for employers to stay informed and prepared for any potential changes ahead.
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