By Lora J. Mizell

UPDATE 08/20/2024: The federal court judge in the Northern District of Texas case Ryan LLC and Chamber of Commerce of the United States of America, et al. v. Federal Trade Commission issued an opinion on August 20, 2024 (earlier than previously expected) in which the court determined that the FTC lacked the requisite legal authority to issue the Final Rule banning non-compete agreements. The Final Rule was "set aside" and may not be enforced or otherwise take effect on September 4, 2024 or thereafter. This ruling may be appealed but, unless it is overruled by an appeals court, the Final Rule discussed below will not take effect.

Earlier this year, we posted news here discussing the Federal Trade Commission’s Final Rule that would ban all non-compete agreements effective September 4, 2024.  There have been several legal challenges to the Final Rule, including a challenge filed in the United States District Court for the Northern District of Texas.  In that case, Ryan LLC and Chamber of Commerce of the United States of America, et al. v. Federal Trade Commission, a Texas federal court judge granted a preliminary injunction of the Final Rule however the injunction applies only to the plaintiffs in that specific case and does not apply nationwide. 

The Final Rule will take effect September 4, 2024 unless a court issues a nationwide injunction against the Final Rule before then. 

Employers should note that the Final Rule requires that employers provide written notice by September 4, 2024 to workers who are subject to non-compete agreements or other employment agreements containing non-compete clauses “that the worker’s non-compete clause will not be, and cannot legally be, enforced against the worker.”

Because it is unknown whether any nationwide injunction might be issued prior to the September 4, 2024 effective date, companies are encouraged to consult with legal counsel to review the Rule's potential impact on past, current, and future employees, and strategies for compliance in light of the uncertainty of the current legal challenges to the Rule and the upcoming effective date on September 4, 2024.     

If you have questions about the applicability or details of the Final Rule, including the required notice that must be given to affected workers, Martin Pringle’s employment attorneys are available to assist in both Kansas and Missouri.