Clifford Chance

Federal District Court Sets Aside FTC's Non- Compete Rule

23 August 2024

On August 20, 2024, a federal judge in the Northern District of Texas ruled in Ryan LLC v. Federal Trade Commission that the FTC exceeded its authority in issuing a rule that would have prohibited most non-compete agreements between employers and employees (the “Non-Compete Rule”), and set aside the Non-Compete Rule, which was set to take effect on September 4, 2024 (the “Effective Date”). As she previously held when she granted the plaintiff's motion for a preliminary injunction, Judge Ada Brown, appointed by President Trump, again held both that the FTC lacked the statutory authority to engage in substantive rulemaking and also that the Non-Compete Rule was arbitrary and capricious. For those reasons, the court determined that the proper remedy was to set aside the Rule on a nation-wide basis, such that the “Rule shall not be enforced or otherwise take effect.”

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