Texas Court Issues Limited Preliminary Injunction on FTC Non-Compete Rule

July 9, 2024

On July 3, 2024, Judge Ada Brown for the Northern District of Texas issued a limited preliminary injunction in favor of the Plaintiffs, preventing the FTC’s new noncompete rule from taking effect against the Plaintiff’s involved in the case. The injunction will not have nationwide effect and all other employers should continue preparing to comply with the FTC’s new rule starting September 4, 2024.

The court did state, however, that it intended to rule on the final merits of the case on or before August 30, 2024. In granting a preliminary injunction, the court concluded that the Plaintiffs are likely to succeed on the merits of their claim regarding the lawfulness of the FTC’s noncompete rule. This suggests that a final ruling on the merits would likely result in the court holding that the FTC exceeded its statutory authority in issuing the noncompete ban. A final permanent injunction barring the FTC from enforcing the new rule would have a nationwide effect while the injunction is in place.

The parties involved in this case include Ryan LLC and the Chamber of Commerce of the United States of America, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce as intervenors. The court denied an associational injunction for members of the Chamber of Commerce.

By: Mark Cameron

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