Texas judge blocks FTC non-compete ban

Aug 21, 2024

A federal judge in Texas has ruled that the non-compete ban issued by the Federal Trade Commission (FTC), due to take effect on Sept. 4, 2024, cannot go forward.

The judge determined that the FTC’s rule exceeded its authority and was “arbitrary and capricious.” The case in Texas was supported by the U.S. Chamber of Commerce.

Another challenge to the rule in Pennsylvania looks like it may have a different outcome.

The judge in that case declined to issue an injunction and indicated the FTC rule was within the scope of its responsibility. If the ban is upheld in that proceeding it could set up a potential review of the rule by the Supreme Court.

For now, the rule will not go into effect — although the FTC has pledged to challenge individual non-compete agreements on a case-by-case basis.