As discussed in our prior alert concerning the FTC final rule banning non-competes, litigation has threatened the final rule’s enforcement and implementation.

Ryan, LLC, the United States Chamber of Commerce, and other related trade organizations (referred to herein as “Plaintiff” and “Plaintiff-Intervenors”) sought an injunction in federal court in the Northern District of Texas, to enjoin the enforcement and implementation of the final rule. The court granted a limited stay and temporary injunction in favor of the Plaintiff and Plaintiff-Intervenors. Even though the Plaintiff-Intervenors sought nationwide relief and associational relief on behalf of their members, the court declined to make its temporary injunction nationwide, and did not extend the temporary injunction to the members of the Plaintiff-Intervenors due to lack of briefing on associational standing. Thus, the temporary injunction only applies to the named Plaintiff and Plaintiff-Intervenors. The court plans to issue a final adjudication on the merits on or before August 30, 2024. Additional briefing could persuade the court to address associational standing before its final adjudication.

The court’s order for temporary relief leaves employers that are not a party to the lawsuit in a tough spot because an August 30 decision does not leave much time for those employers to act before the September 4, 2024 effective date of the FTC final rule. Given the current status of litigation, it may be wise for employers to prepare to comply with the final rule by September 4, including sending required notices. Employers should keep an eye on the ongoing federal litigation in the Eastern District of Pennsylvania as well, since that court is expected to rule on similar injunctive relief by July 23, 2024.