On August 20, 2024, a Texas federal Judge blocked the Federal Trade Commission (FTC) rule banning noncompete agreements in employment contracts. The Judge determined that the FTC exceeded its statutory authority in passing a rule banning noncompetes. The ban was supposed to go into effect on September 4, 2024. In the ruling, the Court said the FTC did not have the authority to implement the noncompete ban. Wessels Sherman will update you on any future rulings because the Texas decision is probably not the final word on the matter as the FTC may appeal and there are other cases pending in other courts. It would not be surprising if this issue made its way to the U.S. Supreme Court at some point for a definitive answer.

Companies should remember that noncompete agreements can still be governed under state laws and employers should review their agreements to make sure they protect legitimate business interests and comply with applicable law and restrictions on noncompetes. This is a quickly moving area of employment law. If you have any questions, please contact our Wessels Sherman attorneys for assistance.