b'Legally Speaking CSIA 29O n August 20, 2024, a Texas federal court imposed a nationwide injunction barring the implementation of a Federal Trade Commission (FTC) regulation thatwouldhaveinvalidatedexistingnon-compete agreements. Ryan LLC v. Federal Trade Commission resolves uncertainty among employers since the FTC finalized its non-compete regulation (Final Rule) in April 2024.The FTCs Final Rule was scheduled to become effective on September 4, 2024.Although the FTC may immediately appeal the Texas federal courts injunction, the Final Rule will not take effect throughout the United States as scheduled. Currently, various courts are divided over this issue. Anticipate these court battles to move to appeal. In the meantime, employers do not need to distribute FTC required notices advising employees that their agreements are unenforceable. The Final Rule was designed to bar enforcement of existing non-compete agreements in nearly all situations.It was also intended to prohibit employers from creating most new non-compete agreements. According to the FTC, such agreements are inherently anti-competitive.However, many employers see non-compete agreementsi.e., restrictive covenants enteredintovoluntarilywithneworexisting employees to prevent unfair competitionas vital business tools needed to protect their business interests.has indicated it will appeal the decision to the Fifth The FTC was accused of overreaching and exceeding itsCircuit Court of Appeals. The Biden AdministrationCENTRAL STATES INSULATION ASSOCIATIONadministrative authority without congressional approval.provided the impetus to the FTC for outlawing non-Other agencies are now facing similar scrutiny.compete agreements.Various legal challenges have been attempted since theAlthough the Final Rule is enjoined, employers should Final Rule was issued, but Ryan LLC is the first casenonethelessbepreparedfortheirnon-compete to issue a nationwide injunction against the FTCsagreements to meet with extra scrutiny from courts in implementation of the non-compete rule.The courtthe future.Given the heightened publicity and recent held that the FTC exceeded its statutory authority byconfusion surrounding such contracts, companies promulgating the Final Rule, which the court determinedwanting to prevent unfair employee competition should to be arbitrary and capricious.According to the court,consult with experienced employment counsel. These the Final Rule was unreasonably overbroad without aagreements must be carefully crafted and tailored reasonable explanation, and would have imposed ato an employers particular circumstances. one-size-fits-all approach with no end date.The court identified these flaws as the hallmark of an unlawfulIf you have questions about the FTCs Final Rule or effect agency action and concluded that the proper remedyof the courts nationwide injunction, please contact Bob under the Administrative Procedures Act (APA) was toDunlevey (rdunlevey@taftlaw.com) or Marc Fleischauer set aside the FTCs Final Rule in its entirety. The FTC(mfleischauer@taftlaw.com) for more information.csiaonline.org'