On August 20, 2024, a federal district court in Texas issued a nationwide order blocking the Federal Trade Commission (FTC)’s noncompete rule, which was scheduled to take effect on September 4, 2024. As we previously reported, the noncompete rule would have invalidated most existing noncompete agreements, except for those with senior executives, and would have prohibited all new noncompete agreements. The judge decided that the FTC exceeded its authority and was arbitrary and capricious in crafting a one-size-fits-all solution to address allegations that some employers abused their powers in enforcing noncompete agreements with low-level workers (Ryan v. FTC, ND Tex, August 2024).
Tips: Noncompete agreements are generally forbidden in California and Montana. Statutes in Idaho, Oregon, and Washington impose strict requirements for noncompete agreements to be valid. For details, see our Legal Guide, Noncompetition Agreements.
