This past week, the FTC appealed a Texas federal court’s August ruling that blocked nationwide enforcement of the non-compete ban. The non-compete ban will remain blocked during the pendency of the appeal process. However, the outcome of the appeal will determine: (1) whether the non-compete ban remains blocked; and (2) the future scope of the FTC’s regulatory authority. There are three court challenges to the non-compete ban. The status of those challenges (including appeals) is detailed below:

Ryan v. The Federal Trade Commission:On October 18, 2024, the FTC filed a Notice of Appeal to challenge a Texas federal court’s seminal ruling, which held the non-compete ban unlawful and blocked—nationwide—the FTC’s non-compete ban from taking effect on September 4, 2024. Pending the appeal, the non-compete ban remains enjoined. The rule will now be considered by the Fifth Circuit. It is likely the issue will be appealed to the U.S. Supreme Court for review.

Properties of the Villages, Inc. v. Federal Trade Commission:In August 2024, a Florida federal court entered a limited injunction prohibiting enforcement of the non-compete ban against the named plaintiff. In late September 2024, the FTC filed a Notice of Appeal. The rule will now be considered by the Eleventh Circuit. If there is a circuit split in the U.S. Courts of Appeals, that could create uncertainty in the business community. A circuit split on an issue of national importance, such as this, would also increase the high probability that the U.S. Supreme Court would entertain an appeal and weigh in itself.

ATS Tree Services, LLC v. Federal Trade Commission: As the appeals of the Ryan and Villages cases progress, one challenge to the non-compete ban will not be moving forward. In July 2024, a Pennsylvania federal court upheld the legality of the FTC’s non-compete ban. Following that ruling, the Court refused to issue a stay pending the appeal in Villages and the then-anticipated Ryan appeal, prompting the plaintiff to abandon its challenge to the non-compete ban and dismiss the case.

Evaluating the potential impact of FTC leadership change: Another consideration for the non-compete ban’s legal battle is the fate of FTC Chair Lina Khan’s tenure. Her three-year term expired in late September, but she may remain on the job as acting chair until or if she’s replaced. Depending on the outcome of the Presidential and Congressional elections, the FTC could come under new leadership at which time the non-compete ban could be rescinded and/or the appeals dropped.

What comes next? As the appeal process unfolds, the non-compete ban remains blocked vis-à-vis the Ryan court’s ruling.