This is an update to a blog post dated April 24, 2024.

 On April 23, 2024, the Federal Trade Commission (“FTC”) announced a final Non-Compete Clause Rule (the “Rule”) banning most non-competition agreements, often referred to as “non-competes.” The sweeping regulation purported to nullify and prohibit almost all non-competes for ordinary workers and most upper-management employees starting on September 4, 2024. However, litigation challenging the Rule was filed almost immediately after its announcement.

 This week, a Texas federal judge determined that the FTC “lacks statutory authority” to ban most non-competes, and therefore barred the Rule from becoming effective. More specifically, the judge provided that the “FTC lacks substantive rulemaking authority with respect to unfair methods of competition” and found the Rule “arbitrary and capricious because it is unreasonably overbroad without a reasonable explanation.” 

 The FTC has since stated that it is considering an appeal.