The Federal Trade Commission's (FTC) efforts to enforce its final rule banning employment noncompetes have faced significant legal challenges, with a recent ruling by the Northern District of Texas setting aside the rule. DeHeng Chen LLC provides insights into what this decision means for employers and what steps they should consider in light of this ongoing legal debate.

The Federal Trade Commission (FTC) has struck out in enforcing its final rule banning employment noncompetes, but there are more innings to go. Keep in mind that the rule would not have applied to entities exempt from the FTC’s jurisdiction (including banks, savings and loan institutions, and credit unions). However, federal banking regulators retain discretion to apply the rule to entities under their jurisdiction.

How did the Court Rule, and Why?

The Northern District of Texas had previously enjoined enforcement of the rule on a preliminary basis as to the parties in that case, Ryan, LLC, et al. v. Federal Trade Commission. On August 20, the same court issued a final order granting summary judgment to the rule’s challengers and denied the FTC’s motion for summary judgment on the same issues, declaring, “The Court sets aside the Non-Compete Rule. Consequently, the Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024 or thereafter.”

In short, the court reasoned that in issuing the rule banning noncompetes, the FTC exceeded the powers granted to it by Congress in the FTC Act. Given the U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, however, this is hardly a surprise. Loper Bright had been issued mere days before the Northern District of Texas’ original opinion. After more time and when ruling on the merits, the court relied on Loper Bright in ruling that the FTC did not have authority from Congress to issue this kind of rule banning noncompetes.

While that lack of authority was the court’s primary reasoning, it also reasoned that the rule violated “the APA’s [Administrative Procedure Act] arbitrary-and-capricious standard.” Echoing some of the criticism following the rule’s issuance, the court found the rule “unreasonably overbroad without a reasonable explanation. [It] imposes a one-size-fits-all approach with no end date, which fails to establish a ‘rational connection between the facts found and the choice made.’”

This section of the opinion could be viewed as a road map for how to successfully challenge administrative rules given the Supreme Court’s decisions this term altering the standards and timing for such challenges.

What Comes Next?

For now, the rule has been invalidated and cannot be enforced, but appeals are likely. We now have decisions from district courts reaching different conclusions, but only the Northern District of Texas’ decision is ripe for appeal at this point. Given the several months that the appeals process takes and the slim odds that one or more of these challenges makes it on the Supreme Court’s docket in the upcoming term, we have several months to go before receiving the kind of certainty that a decision from the highest court in the land can provide.

How Should Employers React?

While the immediate concern presented by the FTC rule has been mitigated, noncompetes may face continued challenges at both the state and federal level through other legislative or regulatory initiatives. For example, the FDIC’s Final Statement of Policy on Bank Merger Transactions, effective October 28, 2024, provides “the FDIC generally expects that the selling [insured depository institution] will neither enter into non-compete agreements with any employee of the divested entity nor enforce any existing non-compete agreements with any of those entities.” Employers should consider this trend when entering new agreements and determining what restrictions may be appropriate and necessary to protect their businesses in the future.

This current climate still presents an opportunity for employers to take stock of their current practices and determine whether changes are necessary before being forced to do so by applicable law. For instance, to the extent an employer does not currently limit noncompetes to “senior executives” or certain leadership positions, it may consider doing so for practical reasons and in anticipation of future changes in applicable law, including the state-by-state rules that may apply. However, nothing in this decision compels employers to act at this point.

DeHeng Chen LLC’s Commitment to Strategic Employer Guidance

DeHeng Chen LLC is closely monitoring developments surrounding employment noncompetes and other workplace regulations. Our team provides comprehensive counsel to help businesses navigate complex legal landscapes, mitigate risks, and stay ahead of regulatory changes.

For tailored legal advice or to discuss how these developments may affect your organization, please contact us. We are here to support your business’s success in an evolving regulatory environment.

解读就业限制性竞业协议的法律动向

美国联邦贸易委员会（FTC）推动实施禁止就业竞业协议的最终规则，近期在得克萨斯州北区联邦地区法院遭遇重大挫折，该规则被裁定无效。德恒陈律师事务所就这一裁决的影响及企业应对措施提供专业见解，以帮助客户在不断变化的法律环境中做出明智决策。

FTC禁止竞业协议规则被推翻

FTC原定于2024年9月4日生效的禁止竞业协议规则，在Ryan, LLC等诉联邦贸易委员会案件中被得克萨斯州北区联邦地区法院判决无效。法院批准了原告的简易判决，认为FTC超越了《联邦贸易委员会法案》赋予的权限。此外，法院指出，该规则违反了《行政程序法》（APA）的规定，裁定其“武断且不合理”，因为规则范围过于宽泛，未能明确说明其条款与目标之间的合理关联。

法院判决主要依据了美国最高法院在Loper Bright Enterprises诉Raimondo案件中的裁决，该裁决限制了行政机构在没有明确国会授权的情况下颁布广泛规则的能力。上述先例进一步巩固了法院认为FTC缺乏实施竞业协议禁令的法定权限的立场。

竞业协议规则的下一步发展

虽然得克萨斯州北区联邦地区法院已宣布该规则无效，但预计此裁决将面临上诉。由于不同地区法院可能会做出相互矛盾的判决，该问题或将最终提交美国最高法院裁定。然而，这一过程可能需要数月时间，FTC规则的最终命运尚不明朗。

与此同时，企业必须保持警惕，因为立法和监管趋势仍在不断审查竞业协议。例如，美国联邦存款保险公司（FDIC）最近出台的政策对银行合并后的员工竞业协议持不鼓励态度，表明限制竞业协议的趋势正在逐步扩大。

企业的应对措施

尽管FTC竞业协议规则的直接威胁暂时解除，但企业不应对此掉以轻心。相反，这一时机为企业重新评估现行做法并为潜在的法规变化做好准备提供了机会。以下几点建议值得关注：

• 精细化竞业协议：企业应评估现行的竞业协议是否针对高级管理层或领导职位进行了合理的限制，平衡业务保护与法律合规。

• 关注趋势：随着联邦和州层面的举措日益增多，及时掌握相关立法和监管政策的动态至关重要。

• 提前调整：主动将竞业协议的实践与预期的法律标准对齐，可减少潜在的运营中断和法律风险。

德恒陈律师事务所致力于为雇主提供战略指导

德恒陈律师事务所将密切关注与就业竞业协议及其他工作场所法规相关的最新发展。我们的团队提供全面的法律咨询服务，帮助企业应对复杂的法律环境，降低风险，并在不断变化的监管环境中保持领先地位。

如需定制的法律建议或讨论这些发展可能对贵组织的影响，请随时与我们联系。我们将全力支持您的企业在不断变化的法规环境中取得成功。