Texas Court Strikes Down FTC’s Non-Compete Ban on Nationwide Basis

On August 20, the Northern District of Texas held that the Federal Trade Commission’s (FTC) rule banning non-competes was unlawful and set the rule aside on a nationwide basis. As a result, the rule will not be enforced or take effect.

Previously, the court had only enjoined the FTC from enforcing and implementing the rule against the tax services firm that sued the FTC and several other parties that intervened in the case. That decision is discussed here. More recently, a Pennsylvania court had declined to preliminarily enjoin the rule (that decision is discussed here) and a Florida court had issued a limited preliminary injunction, only enjoining the FTC from enforcing or implementing the rule against the plaintiff in that case, much like the Texas court had done earlier.

While this decision was not necessarily a surprise given the Texas court’s initial decision in July, it comes as a relief to employers, as the rule’s September 4 effective date was fast approaching. We will continue to monitor for any appeals and other developments. Stay tuned for a more in-depth review of the decision to come.