FTC – Non-Compete & Trade Secrets Law

July 24, 2024July 26, 2024 by Duane Morris

Pennsylvania Federal Court Denies Injunction to Halt FTC’s Ban on Noncompetes

As reported in our prior Alert, on April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 to approve a final rule:

Banning noncompete agreements with virtually all workers 120 days after publication in the Federal Register (i.e., on September 4, 2024);
Invalidating existing noncompetes with all workers except senior executives; and
Requiring employers to send a clear and conspicuous notice to affected workers, by the effective date, that the worker’s noncompete clause will not be, and cannot legally be, enforced.

At least three challenges to the noncompete ban have been filed in federal courts since that time, but none have yet succeeded in halting the ban nationwide. As reported in our recent Alert, on July 3, 2024, in the Ryan lawsuit, the U.S. District Court for the Northern District of Texas enjoined the FTC from enforcing its noncompete ban and stayed the ban as to the parties to that lawsuit, but refused to issue a nationwide injunction or stay that would apply to other employers. On the heels of the decision in Ryan, on July 23, 2024, the U.S. District Court for the Eastern District of Pennsylvania, in ATS Tree Services, LLC v. Federal Trade Commission, et al., denied the plaintiff’s motion seeking a nationwide injunction and stay, dealing a further blow to efforts to halt the noncompete ban.

Read the full Alert on the Duane Morris LLP website.

July 3, 2024July 26, 2024 by Duane Morris

FTC Enjoined from Enforcing Ban on Noncompetes, but Texas Federal Court Refuses to Issue Nationwide Injunction

As reported in our prior Alert, on April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 to approve a final rule banning noncompete agreements with all workers 120 days after publication in the Federal Register (i.e., on September 4, 2024), and invalidating existing noncompetes with all workers except senior executives. Ryan LLC, a national tax preparation service, filed suit challenging the FTC’s noncompete ban shortly after it was issued. The U.S. Chamber of Commerce and other business associations later joined the lawsuit. The parties challenging the noncompete ban filed motions to stay/enjoin the ban. Following briefing, the court indicated that it would decide the motions to stay/enjoin the noncompete ban without requiring a hearing. On July 3, 2024, the U.S. District Court for the Northern District of Texas enjoined the FTC from enforcing its noncompete ban against the plaintiff and plaintiff-intervenors in the Ryan lawsuit and stayed the noncompete ban as to those parties, but refused to issue a nationwide injunction or stay that would apply to other employers, see the court opinion. The court also refused to extend the scope of the injunction and stay of the noncompete ban to members of the U.S. Chamber of Commerce.

Read the full Alert on the Duane Morris LLP website.

April 23, 2024July 26, 2024 by Duane Morris

FTC Bans Almost All Noncompete Agreements

On April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 to approve a final rule banning non-competes with all workers 120 days after publication in the Federal Register, and invalidating existing non-competes with all workers except senior executives. Although the final rule abandons many aspects of the rule proposed in January 2023 (see our prior Alert), the final rule represents a sea change in the law relating to non-compete clauses in the United States.

Read the full Alert on the Duane Morris LLP website.

April 19, 2024July 26, 2024 by Duane Morris

FTC to Vote April 23 on Rule to Ban Noncompete Agreements

The Federal Trade Commission will vote at an open commission meeting to be held virtually on Tuesday, April 23, 2024, at 2:00 p.m. Eastern on its proposed rule banning employers from entering into noncompete agreements with workers. As reported in our prior Alert, the proposed rule would prohibit employers from entering into, maintaining, enforcing or threatening enforcement of a noncompete clause with virtually any worker and invalidate existing noncompete clauses with both current and former workers.

Read the full Alert on the Duane Morris LLP website.

February 9, 2023June 22, 2023 by Duane Morris

Bipartisan Senate Seeks to Largely Eliminate Noncompete Agreements in New Bill

In the wake of the Federal Trade Commission’s (FTC) proposed regulation banning noncompete agreements except in limited circumstances, a bipartisan Senate group led by Democrat Senator Chris Murphy of Connecticut and Republican Senator Todd Young of Indiana introduced the Workforce Mobility Act of 2023 on February 1, 2023. If enacted, the legislation would effectively eliminate noncompete agreements entered into after the bill becomes law.

Read the full Alert on the Duane Morris LLP website.

January 6, 2023June 22, 2023 by Duane Morris

FTC Proposes a Retroactive, Nationwide Ban on Non-Compete Clauses

Just one day after entering into consent agreements invalidating non-competes with three companies, on January 5, 2023, the Federal Trade Commission (FTC) proposed a new non-compete rule that would prohibit employers from entering into, maintaining, enforcing or threatening enforcement of a non-compete clause with virtually any worker and invalidate existing non-compete clauses with both current and former workers. If the non-compete rule is finalized by the FTC in the same or substantially same form as proposed, and if it survives the legal challenges that are sure to follow, the non-compete rule would make non-compete clauses an unfair method of competition under Section 5 of the FTC Act, regardless of inconsistent state statutes, regulations, orders or interpretations, and would represent a sea change in the law relating to non-compete clauses in the United States.

Rea the full Alert on the Duane Morris LLP website.

November 19, 2022June 22, 2023 by Duane Morris

FTC Expands Boundaries of What It Considers Unfair Competition Methods Under FTC Act Section 5

On November 10, 2022, the Federal Trade Commission (FTC) issued a policy statement that significantly expands the scope of what the FTC considers “unfair methods of competition” under Section 5 of the FTC Act (the “Policy Statement”). The announcement comes more than a year after the FTC rescinded its previous policy against pursuing “standalone” Section 5 Unfair Methods of Competition claims and interpreting Section 5 as coextensive with the Clayton and Sherman Acts. The Policy Statement appears to align with FTC Chair Lina Khan’s goal of increasing enforcement of conduct the FTC deems to be unfair regardless of whether it violates the Sherman and Clayton Acts.

Read the full Alert on the Duane Morris LLP website.