FTC Bans Non-Compete Agreements Update

June 28, 2024

According to the Code of Federal Regulations (“CFR”), a final rule that a federal agency has approved will become effective 120 days after being published in the Federal Register. That date has finally been set for the Federal Trade Commission’s (“FTC”) landmark rule set to ban most post-employment non-compete provisions between employers and their employees. The FTC’s final rule was published in the Federal Register on May 7, 2024, with the effective date set for September 4, 2024.

As we’ve previously discussed, the FTC’s non-compete rule is facing several legal challenges. Lawsuits seeking an injunction against it have been filed, including Ryan, LLC v. Federal Trade Commission, Chamber of Commerce v. Federal Trade Commission, and ATS Tree Services, LLC v. Federal Trade Commission. The outcomes of these cases are eagerly awaited, with Ryan and ATS currently awaiting rulings on requests for a preliminary injunction and the Chamber of Commerce’s case being dismissed without prejudice due to their intervention in Ryan as a party.

These lawsuits have raised complex legal questions under the major questions doctrine and the non-delegation doctrine. The major questions doctrine requires that Congress provide clear and direct authority to agencies when delegating rulemaking on questions of vast economic and political significance. The Non-Delegation Doctrine, interpreted by the U.S. Supreme Court, states that Congress may not transfer powers that are strictly and exclusively legislative under the Constitution. To add to the complexity, the U.S. Supreme Court recently issued its ruling in Loper Bright Enterprises v. Raimondo, which upended the long-standing administrative law doctrine known as “Chevron Deference” and decreased federal agency power to answer or interpret ambiguities with statutes put forth by Congress. To stay informed about these cases and the issues presented in each, follow RR&A on LinkedIn and subscribe to our newsletter on our website.

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Tannon Symm

Tannon is a Junior Associate at R. Reese & Associates and part of the Commercial Contracts, Transactions, Corporate and Land and Title teams. To learn more about Tannon, visit his attorney page.

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