Client Alert
Federal Judge Considering Stay of FTC Non-Compete Rule
July 2, 2024
By: Richard B. Bar and Rachel Amster
Federal Judge Considering Stay of FTC Non-Compete Rule By: Richard Bar; Rachel Amster Following the Federal Trade Commission’s (“FTC”) adoption in April 2024 of a Rule banning new non-compete clauses with workers (“Rule”), the FTC announced that the Rule will take effect on September 4, 2024. By the effective date, individuals and companies impacted by the Rule must give notice to their non-Senior Executive workers with whom they have existing non-compete clauses. The notices must advise such workers that these clauses are unenforceable. As addressed in a previous GKG Law client alert, the Rule treats existing non-compete clauses with Senior Executives differently than with non-Senior Executives. New non-compete clauses with Senior Executives will be prohibited after the Rule takes effect, but existing Senior Executive non-compete clauses will remain enforceable. Litigation challenging the Rule has already commenced. There is pending litigation which may affect the effective date and the requirement to issue the unenforceability notice. Ryan, LLC, a global tax services firm, has filed suit in federal court in Texas (“Texas District Court”) challenging the FTC’s authority to issue the Rule and has requested the Texas District Court stay the effective date of the Rule. The Texas District Court is expected to rule on staying the effective date in July. GKG Law is continuing to review and analyze the impact of the Rule and will monitor legal challenges. Further updates will follow. If you have any questions, please contact Rich Bar at rbar@gkglaw.com or Rachel Amster at ramster@gkglaw.com.
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