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On August 20, 2024, a federal court issued an order permanently setting aside the Federal Trade Commission's ("FTC") rule that would have largely banned noncompetition agreements between employers and employees. Judge Ada Brown found that the FTC lacked the authority to promulgate the rule, and that it was "arbitrary and capricious" because it was "unreasonably overbroad without a reasonable explanation." Barring a successful appeal, the FTC cannot enforce the non-compete ban against any employers.
This comes as welcome news for employers who faced much uncertainty over the past year and a half since the FTC proposed the rule. Employers should remain cognizant of state-level restrictions and prohibitions on noncompetition agreements. But for now, the status quo prevails.
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