August 2024 | Client Alert
On August 20, 2024, a federal judge in Texas issued a ruling blocking the implementation of a new U.S. Federal Trade Commission (FTC) rule that sought to impose a near-total ban on noncompete agreements. The rule was set to take effect nationwide on September 4.
U.S. District Judge Ada Brown determined that the FTC had overstepped its statutory authority with this rule, describing it as “arbitrary and capricious.” The judge maintained that, even if it had the authority to establish the rule, the FTC failed to provide sufficient justification for such an extensive prohibition, noting that the agency lacked evidence to support such a broad ban as opposed to targeting specific harmful noncompete agreements.
While the ruling prevents the FTC from enforcing the new rule nationwide, it does not preclude the agency from addressing noncompete agreements through more targeted, case-by-case actions. In addition, the FTC is considering an appeal of the ruling.
In the meantime, employers can still enforce and establish noncompete agreements in accordance with local requirements. Additionally, employers should continue enhancing their safeguards for confidential, proprietary, and trade secret information while keeping an eye on local legislation and court rulings that may challenge the scope of confidentiality clauses and restrictive covenants.
At O’Neill & Borges we will continue monitoring the development of this ruling. We are available to assist you with any questions you may have regarding this new standard.
Because of the general nature of this newsletter, nothing herein should be considered as legal advice or a legal opinion. For further information about the contents of this newsletter, or should you need further assistance in connection with this matter, please contact the firm’s Labor and Employment Department.
For any questions or inquiries regarding this topic do not hesitate to contact us at info@oneillborges.com or your prime contact attorney at O’Neill & Borges LLC. Please refer to www.oneillborges.com.
© 2024 O’NEILL & BORGES LLC – All Rights Reserved
This O’Neill & Borges Client Alert is prepared for general information purposes only. It does not constitute legal advice or a legal opinion; nor does it establish an attorney-client relation with the recipient. For further information or to establish an attorney-client relation please contact us at info@oneillborges.com or your prime contact attorney at O&B.