A Texas federal judge recently blocked the Federal Trade Commission’s (“FTC”) attempt to ban essentially all non-compete agreements. The FTC Rule, published earlier this year and set to go into effect on September 4, 2024, was met with a wave of litigation. The court determined that the FTC lacks the statutory authority to promulgate the FTC Rule. The court went on to call the rule arbitrary and capricious as it chose to impose a sweeping prohibition that would prohibit entering into and enforcing virtually all non-competes rather than targeting specific, harmful non-competes. Following the ruling, a spokesperson for the FTC stated that they are seriously considering a potential appeal.
