On August 20, 2024, Judge Ada Brown of the US District Court for the Northern District of Texas set aside the Federal Trade Commission’s rule that effectively prohibited the use of non-compete agreements. Interpreting the Administrative Procedure Act, which provides for judicial review of the actions of federal agencies like the FTC, the court found that the FTC’s non-compete ban was unlawful.
As previously reported, the US District Court for the Northern District of Texas issued an injunction prohibiting the Federal Trade Commission (FTC) from enforcing its non-compete ban, which is set to take effect on September 4. That ruling, however, was limited to the plaintiffs in that case. Similarly, the US District Court for the Eastern District of Pennsylvania had a request before it and denied issuing an injunction against the FTC. It found that the plaintiff, ATS Tree Services, LLC, could not show irreparable harm, but, more importantly, it also found that plaintiff failed to show a likelihood of success on its claims that (1) the FTC does not have authority to issue a nationwide non-compete ban, and (2) the FTC Act unconstitutionally delegates legislative power to the FTC. The Pennsylvania court’s decision on “likelihood of success” is at odds with the finding of the Texas district court, which is an indication that the fate of the FTC non-compete ban will likely be resolved by the federal appellate courts and potentially the US Supreme Court. The Texas district court is scheduled to issue a final decision in the case on August 30, which could negate the non-compete ban for all employers — at least until the appeals courts and the Supreme Court have a say in the matter.
If you have questions regarding the effects of these decisions on your non-compete agreements, please contact a member of our trade secret team.
With large swaths of the workforce working remotely, some employers have growing concerns about employee productivity, as well as information security and confidentiality. In today’s remote work era, organizations face significant challenges in balancing employee monitoring with safeguarding confidential information and trade secrets. This article explores key insights and strategies for HR professionals navigating these complex issues.
As previously reported, the consolidated lawsuits challenging the Federal Trade Commission’s (FTC) non-compete ban sought a preliminary injunction and a stay until litigation is resolved concerning the FTC’s non-compete ban. On July 3, 2024, a federal judge in the US District Court for the Northern District of Texas decided that a preliminary injunction was appropriate and temporarily enjoined the non-compete ban from going into effect. It is important to note, however, that the court declined to issue a nationwide injunction to nonparties of the suit. In other words, the FTC’s non-compete ban is still set to take effect on September 4, for any employer that is not a party in the Ryan, LLC vs. The Federal Trade Commission lawsuit.
The Louisiana Legislature unanimously passed Act No. 273. Governor Jeff Landry signed the act into law on May 28, 2024 and the act becomes effective on January 1, 2025.
Read our previous post, The LA Senate Passes Restrictions on Non-Competes for Primary Care Physicians; SB 165 Now Moves to the House of Representative for a Vote, to learn what this means for primary care physicians going forward.
On April 23, 2024, the Federal Trade Commission (FTC) issued its Final Non-Compete Agreement Rule (Final Rule), banning non-compete agreements between employers and their workers. The Final Rule will go into effect 120 days after being published in the Federal Register. This Final Rule will impact most US businesses, specifically those that utilize non-compete agreements to protect their trade secrets, confidential business information, goodwill, and other important intangible assets.
Joe Lavigne, a partner in Jones Walker LLP’s Labor & Employment Practice Group and founding member of Jones Walker’s Trade Secret Insider blog, was quoted in the TechTarget article “Election might decide fate of FTC noncompetes ban” on April 26, 2024. In the article, Joe discusses how the Federal Trade Commission’s ban on noncompete agreements affects employers and how any changes to this rule could make operations more challenging for business if reversed following the 2024 presidential election. The rule is expected to take effect 120 days after being published in the Federal Register.
The Federal Trade Commission voted 3-2 today to ban noncompete agreements between employers and employees. A full analysis of the final rule will be forthcoming, but key takeaways are:
We look forward to bringing you more information about this groundbreaking final rule in the coming days. If you have questions on how this rule affects you or your business, please reach out to a member of the Jones Walker trade secrets, unfair competition, and noncompetes team.
Last month, we wrote about the anticipated impact of the Federal Trade Commission’s expected rule on the healthcare industry. In that post, we discussed the impacts many argued non-competes would have on the healthcare space. Specifically, while some physician groups argue the prevalence of non-competes in the healthcare industry contributes to physician shortages, other industry groups that represent rural hospitals argue they are necessary to protect the investment those small communities make in desperately needed new physicians. On April 8, 2024, the Louisiana Senate unanimously passed SB 165, a piece of legislation that seemingly takes both of these conflicting concerns into account.
Last year, the Federal Trade Commission (FTC) issued a proposed rule to ban most noncompete agreements nationwide. With very limited exceptions, the sweeping rule forbids any contractual term between an employer and a worker that has the effect of preventing the worker from accepting employment with a competitor, or operating a competitive business, after the conclusion of the worker’s employment with the employer. The proposed rule also includes an expansive definition of “worker” — including employees, independent contractors, interns, and even volunteers — and includes no exception for executive or highly compensated employees. The comment period for the rules ended April 29, 2023, and the FTC is expected to issue its final rule — which may or may not be as expansive as the proposed rule — in April 2024.
The FTC focused on healthcare and physicians when drafting its proposed rule, reportedly looking to a 2017 paper published in Management Science titled “Screening Spinouts,” which evaluated the economic effects of noncompete agreements in the healthcare industry. And according to FTC Chairperson Lina Khan, the healthcare industry has given more feedback on the proposed rule than any other sector. Of note, the American Hospital Association (AHA) has criticized the FTC’s proposed rule, highlighting the negative impact it will have on retention in for-profit hospitals, while the American Medical Association (AMA), the country’s largest physician professional organization, has adopted an official position in support of the rule.
