Client Alert
By Attorney David W. McGrath
August 23, 2024
On August 20, 2024 a federal judge from the Northern District of Texas blocked the FTC’s final rule (“the Rule”) banning noncompetition agreements nationwide. As discussed in our most recent alert on this topic (An Update on the FTC’s Non-Compete Rule), the Court held that the FTC lacked the necessary authority to impose the Rule. Last month, another federal court, the Court of Appeals for the Third Circuit, denied a preliminary injunction that sought to enjoin the Rule from taking effect. It appears there will be conflicting decisions from different federal courts in different jurisdictions, which will take time to resolve.
In the meantime, employers need not make changes to existing noncompete agreements based on the September 4, 2024 intended effective date of the Rule. However, employers should continue to adhere to state statutes and common law in their jurisdiction(s) governing the use and enforceability of noncompetition agreements.
Employers should consult with their legal counsel to review their agreements. Our attorneys assist clients in New Hampshire, Massachusetts, Maine, Vermont and other states where they are admitted to practice law. In addition, we have a nationwide network of law firms that can also help in states where we are not admitted to practice. Visit sheehan.com for more information about our Labor and Employment Group.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.
Attorney David W. McGrath is a member of Sheehan Phinney’s Labor and Employment Group.