As of Aug. 21, the Northern District of Texas ruled that the FTC exceeded its statutory authority by creating the non-compete rule, effectively halting its implementation. This decision stems from the case brought by the U.S. Chamber of Commerce, Ryan LLC v. FTC, which initially led to a temporary block on July 3. That temporary block is now permanent, pending any further action, such as an appeal by the FTC.
Chief Justice Ada Brown determined that the FTC improperly used the FTC Act’s “housekeeping rules” rather than its “substantive rulemaking power” to establish the non-compete rule. She also ruled that this “sweeping rule” violates the Administrative Procedure Act.
Throughout this process, the ICCFA has been at the forefront, working tirelessly with the FTC, submitting comments, and presenting concerns on behalf of our members. Our efforts have been instrumental in shaping the FTC’s proposed rule, particularly concerning non-competes established through a genuine business sale that directly impacted our members. It’s important to note that the final rule, even if it does ultimately get instituted, does not apply to non-compete agreements made as part of a bona fide sale of a business entity.
While the FTC seriously considers an appeal, the non-compete rule is currently on hold and no longer in effect. We will monitor the situation and provide updates as more information becomes available. Your involvement and understanding are crucial in this process. Please do not hesitate to reach out if you have any questions or need further details.
The ICCFA is here to help you and provide the necessary clarification.
