A federal court in Texas blocked a forthcoming ban on non-compete agreements that was scheduled to take effect nationwide on Sept. 4, 2024. The judge ruled the Federal Trade Commission (FTC) did not have the authority to issue such a broad action.
Business and employer groups are praising the ruling as a win. Employers that use non-compete agreements typically cite the need to protect trade secrets and other sensitive information from rival firms looking to poach talent.
Non-compete agreements affect approximately 30 million workers in the U.S., encompassing a wide range of employees from entry-level to executive positions. These agreements typically restrict workers from joining competing firms or starting their own businesses.
The FTC is expected to appeal the ruling. Business owners should continue to monitor this issue as it progresses through the appeal process.