As previously reported, there were two lawsuits filed to challenge the Federal Trade Commission non-compete ban. Those cases are now essentially consolidated in the US District Court for the Northern District of Texas. The court recently issued an order setting a briefing schedule on the Motion to Stay the Effective Date and Preliminary Injunction (this motion seeks to stay the Final Non-Compete Rule until the litigation is resolved). 

According to the plaintiff’s motion, there are several reasons that the court should stay the effective date and issue a preliminary injunction, including (1) unrecoverable costs associated with the time and attention needed to review all existing non-compete agreements and notify existing and former employees that they are no longer bound; (2) unrecoverable costs associated with the risk of loss of employees, client relationships, and confidential information; and (3) the need, if the rule is later found to be unenforceable, for employers to decide whether to enforce non-compete agreements against employees who left the employer for a competitor in the belief that the non-compete agreement was invalid (thus, forcing the employee to leave their new job).

According to the court’s order, a decision on that motion will be made by July 3, 2024.