Update: Judge Issues Preliminary Injunction of FTC Non-Compete Ban Limited to Named Plaintiffs; Full Injunction Likely to Follow

On July 3, 2024, the U.S. District Court for the Northern District of Texas issued a limited preliminary injunction staying enforcement of the Federal Trade Commission's (the “FTC”) Final Rule banning non-compete agreements (the “Final Rule”) solely with respect to the named plaintiffs in Ryan LLC v. Federal Trade Commission (see our prior Client Alert on the Final Rule here). This means that the FTC may not enforce the Final Rule against Ryan LLC, the U.S. Chamber of Commerce, the Longview Chamber of Commerce, Business Roundtable and the Texas Association of Business. 

However, in her ruling, Judge Ada Brown signaled that the plaintiffs are likely to succeed on the merits and that a full nationwide injunction may follow. Judge Brown indicated that she intends to rule on the merits by August 30, 2024.

In our latest Client Alert, our Compensation, Benefits and Labor & Employment lawyers – Jeff Laska, Alina Grinman, Keith Markel, Jeffrey Englander, John Fulfree, Brian Snarr, Tali Newman and Michael McGovern – discuss the recent update to the FTC’s non-compete ban.

For the time being, non-competes remain effective and enforceable to the same extent as prior to the Final Rule. The Morrison Cohen team continues to monitor these challenges and is available to provide additional information.

Read more in our Client Alert below.