On August 20, 2024, the United States District Court for the Northern District of Texas, in the Ryan lawsuit, struck down a final Federal Trade Commission (FTC) rule―which was set to go into effect on September 4, 2024, and ban noncompetition agreements for virtually all U.S. workers―holding that the rule shall not be enforced by the FTC or take effect as to any workers or employers.
Read the full Alert on the Duane Morris LLP website.
As reported in prior Alerts (on January 6, 2023; April 19 and 23, 2024; and July 3 and 24, 2024), after initially proposing the rule in January 2023, in April 2024 the Federal Trade Commission (FTC) voted 3-2 to approve a final rule:
Legal challenges to the noncompete ban have, thus far, been unsuccessful in securing an order enjoining, staying and/or invalidating the noncompete ban for all employers.
Read the full Alert on the Duane Morris LLP website.
On June 26, 2024, Governor Daniel McKee vetoed and returned to the state Senate a bill to amend the Rhode Island Noncompetition Agreement Act (Senate Bill 2024-S 2436A/2024-H 8059A). As reported in our prior Alert, if signed into law, the bill would have banned and voided existing and future post-employment noncompetition and customer nonsolicitation covenants with essentially all employees.
Read the full Alert on the Duane Morris LLP website.
As reported in our prior Alert, on April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 to approve a final rule:
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.
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.
On June 13, 2024, the Rhode Island House passed, and the state Senate passed in concurrence, a bill to amend the Rhode Island Noncompetition Agreement Act (Senate Bill 2024-S 2436A/2024-H 8059A), which would ban and void existing and future post-employment noncompetition and customer nonsolicitation covenants with virtually all employees.
The existing Rhode Island Noncompetition Agreement Act, which went into effect in 2019, already prohibits noncompetition agreements with nonexempt and “low-wage employees,” undergraduate and graduate students and employees age 18 or younger. The new bill would significantly expand that ban to include all employees, except in limited circumstances, and render all prohibited noncompetition agreements “null and void” and a “violation of public policy.”
Read the full Alert on the Duane Morris LLP website.
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.
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.
On February 28, 2024, the New York City Council introduced a trio of legislative proposals aimed to drastically limit the ability of New York City employers to enter into or enforce non-compete agreements with their workers.
The most sweeping of the bills, Int. 0140-2024, is aptly titled “Prohibition of non-compete agreements.” If passed, the legislation would entirely prohibit businesses in New York City from entering into, or even maintaining, non-compete agreements with any of their workers. All employers would be covered by the bill, as the proposed law defines “employer” to mean “a person that hires or contracts with a worker to work for a person.” The far-reaching bill seeks to apply a prohibition on non-compete agreements to all individuals who work for an employer, whether paid or unpaid, and includes employees as well as independent contractors.
Read the full Alert on the Duane Morris LLP website.
On December 22, 2023, Governor Kathy Hochul vetoed a bill that would have prohibited almost all noncompete agreements in employment contracts in New York. The bill, passed by the New York Legislature in June (see our previous Alert), would have applied to all employers and most individuals, including independent contractors, regardless of compensation level.
Read the full Alert on the Duane Morris LLP website.
