After issuing a narrow party-specific, preliminary injunction against enforcement of the non-compete rule in July, the same Texas court issued broader, permanent relief in a ruling issued today in Ryan, LLC v. FTC. Specifically, the court ruled (in granting a motion for summary judgment brought by the U.S. Chamber of Commerce and others) that the Federal Trade Commission (“FTC”) exceeded its authority in adopting its near-total ban on non-compete agreements and that the FTC’s rule is arbitrary, capricious, and unlawful. The court held that the appropriate remedy is to set aside the rule entirely (as opposed to setting it aside only as to the specific parties in the case). As such, “[t]he Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024, or thereafter.”
This ruling is welcome news for employers across the country. The FTC is likely to appeal today’s ruling, but for now the non-compete rule is blocked nationwide.