Texas Court Strikes Down FTC Rule Banning Non-Compete Agreements

On August 20, 2024, Judge Ada Brown of the Dallas Division of the Northern District of Texas held that the U.S. Federal Trade Commission’s (FTC) new rule regarding employee non-compete agreements was not legally promulgated and was set aside.  The FTC’s Rule, which was set to take effect on September 4, 2024, banned new non-compete agreements and mandated that existing agreements with employees other than “senior executives” were unenforceable.

While it is anticipated that Judge Brown’s decision will be appealed, employers are currently not required to comply with the FTC rule.  However, employers must remain mindful of the laws in many states that either ban or regulate employee non-compete agreements, such as Oklahoma and Colorado.

Sprouse Shrader Smith will continue to monitor this issue and provide updates.  For questions or concerns, please contact either the author of this article or your attorney at the firm.

Article by Article by Iwana Rademaekers
Sprouse Shrader Smith PLLC
August 21, 2024