July 10, 2024
Well – that was true then – but now this will impact zero of you because a federal judge in Texas just blocked the new ban on non-competes from taking effect nationwide at the end of the summer.
Now – I’ve been telling you since January of 2023 that the federal trade commission has been working on and in April finalized a new rule that would make any new non-compete in an employment contract illegal and any existing non-compete invalid – except for one specific group – senior executives who earn more than $151,164 a year and who are in a policy making position. The FTC was basing its authority to create this new rule on the FTC Act of 1914 arguing this ban was necessary because non-competes are an unfair method of competition.
Well – as I told you in this video in April, the US Chamber of Commerce and several other business owners and organizations sued saying the FTC act does not explicitly give the Federal Trade Commission the authority to make a rule like this. They also disagree with the FTC’s conclusion that non-competes are an unfair method of competition. And a Texas federal judge agreed and granted a preliminary injunction. Which means this non-compete ban will not take effect for now – as this case continues to move forward through the courts.
Interestingly enough – in the judge’s 33-page ruling, he definitely referenced the supreme court’s recent ruling that overturned the Chevron doctrine. In case you missed it I did a whole video about the monumental significance of that case and what the supreme court ruled – but the short short version is courts – like this one in Texas – no longer have to give deference to the expertise of government agencies – like the FTC – when it comes to rulemaking or any other issue – like a non-compete ban.
This case is not over and the FTC will continue to fight to keep the ban in place even if this Texas judge ultimately rules it is illegal.
Read the non-compete injunction here
