On August 20, 2024, the U.S. District Court for the Northern District of Texas halted the Federal Trade Commission’s (FTC) final rule prohibiting non-competition clauses with workers. The court entered a final judgment that the FTC’s rule could not be enforced or otherwise take effect on a nationwide basis. The court found that in issuing the non-compete rule, the FTC had exceeded its rulemaking authority regarding unfair methods of competition. The court also found the non-compete rule was arbitrary and capricious because it was unreasonably overbroad. The court’s final judgment is immediately appealable to the Fifth Circuit Court of Appeals and could possibly reach the Supreme Court. The FTC is expected to appeal. The rule had been scheduled to take effect on September 4, 2024.
As a result of the ruling, businesses no longer need to notify workers that non-compete clauses will not be enforced or modify their agreements to remove non-compete clauses. Under Florida law, restrictions for non-competes, non-solicitation (customers and employees), and non-use and disclosure of trade secrets and confidential information remain enforceable. Businesses should make sure these key agreements remain current and are readily enforceable when necessary.
Contact Kevin Zwetch, Partner or by calling 813-669-0122 if you have questions about the impact of this ruling on your business.
