On August 20, a Texas federal court issued a nationwide injunction, blocking the Federal Trade Commission’s (FTC) final rule on non-competes that would have been effective September 4, 2024. The rule would have banned the use of non-competes nationwide with limited exceptions.

With the court’s decision, the rule will no longer take effect as scheduled, and employers are relieved, at least for the time being, from complying with the rule’s requirements. This includes the rule’s mandate that employers issue notices to current and former employees that their non-compete obligations will no longer be enforced. For employers grappling with how, when, and to whom to issue these notices – or whether to issue them at all – the court’s ruling provides a reprieve.

Of course, it’s not over ‘til it’s over, and the court’s decision likely will be appealed by the FTC. In the meantime, employers are returned to the status quo. As we wrote last year when the FTC announced its draft rule, and in April when it issued its final rule, state law remains the primary consideration for employers using restrictive covenants. Even if the FTC rule never takes effect, restrictions on non-competes and other restrictive covenants continue to develop at the state level. Employers that have been reviewing their agreements for compliance should continue doing so – but now with an eye toward compliance with applicable state laws governing their employees, wherever they may be located.