FTC Appeals Nationwide Stay of Rule Banning Non-Compete Clauses
FTC Appeals Nationwide Stay of Rule
Banning Non-Compete Clauses
Richard Bar, Rachel Amster
In October of 2024, the Federal Trade Commission (FTC) appealed a federal Texas District Court’s (Texas Court) order setting aside the FTC’s Non-Compete Clause Rule (Rule) which banned almost all new noncompete clauses. The Texas Court’s set aside applied nationwide and prevents the Rule from taking effect. On January 2, 2025, the FTC filed its appellate brief. It argued that: (1) contrary to the Texas Court’s determination, the FTC has authority to issue the Rule; (2) the Rule was based on the FTC’s thorough and reasonable determination that non-compete clauses are unfair methods of competition, which the Texas Court disregarded; and (3) the nationwide set aside was unwarranted and unnecessary.
The FTC also filed its brief in an appeal of a federal Florida District Court’s (Florida Court) order which preliminarily enjoined the Rule on different grounds. The Florida Court’s order was more limited than the Texas Court’s order. The Florida Court’s order only applied to the plaintiff in that case. Of note, the Florida Court’s order rejected some of the bases of the Texas Court’s set aside. The Florida Court agreed with the FTC that the FTC has authority to issue rules regarding unfair methods of competition, such as the Rule.
The opposing briefs to the Texas Court and Florida Court’s orders are due this month and February, respectively.
GKG continues to monitor these matters. Further updates will follow. Feel free to contact Rich Bar (rbar@gkglaw.com) or Rachel Amster (ramster@gkglaw.com) if you have any questions.