Three lawsuits have challenged the FTC's authority to implement a nationwide ban on non-competes. Two of those lawsuits have succeeded so far in blocking the rule from coming into effect, and we can expect these court challenges will wind up at the Supreme Court. So, for now, the FTC ban on non-competes will not be going into effect, and the validity of non-competes still depends on each state's laws. In California, non-competes are generally held to be void, except in a few narrow circumstances. You can also expect more lawsuits to be filed as trade secret cases and breach of confidentiality clause cases against departed employees.
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FTC Ban on Non-Competes On Hold
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The Federal Trade Commission suffered its first definitive loss Tuesday in the push to ban employment noncompete agreements, although the decision probably isn't the final word given a likely appeal and two other pending challenges also viewed as a test of the agency's efforts to expand its rulemaking footprint. U.S. District Judge Ada E. Brown's ruling means that the ban won't go into effect Sept. 4 as planned, although the agency said it is "seriously considering a potential appeal." For now, however, the decision gives the U.S. Chamber of Commerce a clear win on its bid to stop the FTC in its tracks on efforts to expand rulemaking beyond its normal consumer protection realm and into the essentially unused antitrust space via its authority over "unfair methods of competition."
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