In a significant and sweeping move, the Federal Trade Commission (FTC) adopted a rule in April 2024, the “Non-Compete Rule,” effectively banning the use of all non-compete clauses for many workers starting on September 4, 2024. The rule is embroiled in a battle between two U.S. District Courts. The Northern District Court of Texas granted a motion for preliminary injunction preventing the FTC from moving forward with the rule, but only for plaintiffs of that case while the Eastern District Court of Pennsylvania recently denied a plaintiff’s motion for preliminary injunctive relief. The recent rulings guarantee continued uncertainty regarding the future of non-compete clauses. It is important that employers understand what to expect in anticipation of the rule becoming effective and are aware of the rationale articulated in each court.
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