Earlier this year, the Federal Trade Commission (FTC) introduced a rule aimed at banning most non-compete agreements across the country. However, a federal judge in Texas issued a nationwide injunction on August 20, 2024, blocking the Federal Trade Commission (FTC) from enforcing its rule that would have prohibited employers from implementing or upholding noncompete agreements with employees. This rule was set to go into effect on September 4, 2024, but the ruling halts the FTC’s enforcement efforts. The FTC is considering an appeal, but for now, employers may continue to create and enforce noncompete agreements for both new and current employees. It’s important to remember that non-compete agreements must still comply with applicable state laws and regulations. To maximize legal protection, employers should assess and revise their current confidentiality/noncompete agreements to better align with their specific business needs.
IMPORTANT: This ruling does not prevent courts from reviewing noncompete agreements on an individual basis. Employers should still ensure these agreements are narrowly tailored to improve the likelihood of enforcement. Courts tend to reject agreements that force employees to exit their chosen industry when changing jobs. Employers are encouraged to prioritize confidentiality, non-solicitation, and invention restrictions to safeguard their legitimate business interests and intellectual property.
We will continue to keep you up to date on these developments, including any appeals, but for now, the ban is on hold. Hubric Resources is here to assist with any questions you may have about your existing non-compete agreements or those you would like reviewed—please reach out to your HR consultant or contact Tamara at tamara@hubricresources.com.