A federal district court in Texas has issued a preliminary injunction preventing the Federal Trade Commission (FTC) from enforcing its rule banning most non-compete agreements against a Texas-based tax firm and a group of business associations. The court’s preliminary injunction does not prevent the FTC from enforcing the rule against other U.S. companies. Thus, for now, the FTC rule banning most non-compete agreements is still scheduled to take effect on September 4, 2024. However, the Texas court ruled that the pending legal case is “likely to succeed on the merits,” and promised a ruling on those merits by August 30. 

In the meantime, legal challenges to the FTC’s ban on non-competes are pending in other courts. Thus, there remains a great deal of uncertainty what will happen to the FTC’s attempt to outlaw most non-compete agreements. The FTC’s rule might go into effect on September 4, it might be blocked in other limited cases, or it might be struck down entirely. Employers and businesses are encouraged to monitor developments closely over the summer.

Click the links below to read our previous advisories covering the FTC's ban on non-compete agreements.

• A Deep Dive Into the FTC Ban on Non-Competes
• New FTC Rule Bans Most Non-Compete Agreement

Carolyn M. H. Sullivan contributed to this article