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🚨 Breaking News: Federal Court Halts FTC Noncompete Rule 🚨 A significant development in the accounting and business world: a federal court has issued an injunction against the Federal Trade Commission's (FTC) noncompete rule. This ruling comes after a lawsuit filed by Ryan, a prominent tax services firm based in Dallas, and the U.S. Chamber of Commerce. The noncompete rule, initially set to take effect on September 4th, aimed to limit agreements that prevent employees from working for competitors, thereby promoting fair competition and employee mobility. Ryan’s chairman, G. Brint Ryan, has praised the court’s decision, describing it as a crucial victory against what he terms as government overreach. He argues that the noncompete rule would have unfairly restricted businesses and stifled innovation. On the other hand, the FTC remains firm in its stance, emphasizing that the rule is essential for protecting workers' rights and fostering a competitive job market. This legal battle highlights the ongoing debate over the balance between regulatory oversight and business freedom. The injunction is a temporary measure, and the FTC plans to continue its efforts to implement the rule, which they believe is vital for curbing abusive employment practices. Stay tuned for more updates on this developing story. Read more: https://lnkd.in/gGgjcQp4 #Accounting #LegalUpdate #NonCompete #TaxServices #FTC #BusinessLaw #EmployeeRights #RegulatoryNews

Today saw a big decision on the FTC's rule banning non-compete agreements. A Texas federal district court issued a preliminary injunction holding that: (i) the rule likely exceeds the FTC's congressional authority under the FTC Act; and (ii) the FTC's rulemaking was likely arbitrary and capricious. Although the injunction is limited to the parties in the case (not nationwide), it signals that the FTC rule will likely be stricken down before it goes into effect. A final decision on the merits is expected in August. Regardless of the ultimate outcome of the FTC rule, employers should review their restrictive covenants agreements and give careful consideration to the types of business protections they implement. Non-competes are just one of many tools available to employers to protect their business--and they are not always needed for all employees or in all industries. https://lnkd.in/grXrbVux

Judge Ada Brown’s injunction against the FTC's non-compete rule is likely the beginning of the end for the rule, but there remains risk. So far, the injunction does not apply nationwide, but only to the parties in the case, so it could still go into effect. Plus, many states have laws limiting or banning non-compete provisions in employee contracts, which are unaffected by the injunction. And the FTC can continue to conduct individual investigations into companies' noncompete provisions. In the blog below, I delve into these ongoing risks and make a few recommendations to risk-adverse companies. #antitrust #antitrustlaw #competitionlaw

Are you wondering what’s been happening with the court challenges to the FTC’s final rule banning non-competes? Last week, a Texas federal court stayed enforcement of the FTC’s non-compete ban, but here’s the wrinkle: for now, the stay applies only to the parties in that particular case & does not extend to other employers nationwide. Nevertheless, the decision likely signals the downfall of the FTC’s rule. Read more here: https://lnkd.in/eninNEsQ

Do you use noncompete agreements/clauses and are looking for guidance after the FTC’s new rule banning noncompete agreements? Check out this helpful analysis from my colleagues.

Lowenstein’s Julie Werner and Amy Schwind analyze the Texas court's limited preliminary injunction against the Federal Trade Commission's non-compete ban, affecting only specific parties. Discover what this means for employers and future legal challenges in our latest Employment client alert. Read the full alert: https://bit.ly/3Lcd6Y8 #employmentlaw #employers #noncompete #lawyers #employment

The FTC enacted a rule in April 2024 that would ban most noncompetes. However, a Texas court has just ruled that the FTC exceeded its authority in doing so. The FTC’s rule is still set to become effective in September but we expect that additional courts will come out with similar rulings resulting in a nationwide prohibition on enforcement before then. If employers have questions about the potential impact of the rule, the court’s ruling, or structuring noncompetes and employment agreements, they should contact Milgrom & Daskam.

Following the FTC ban on non-competes, Texas employers and employees may wonder, "How will this new rule affect me?" Before the FTC can enforce the rule, it must publish the final version in the Federal Register, which contains all government agencies' rules and regulations. The final rule will go into effect 120 days following publication in the Federal Register, likely in September 2024. That said, legal challenges have already been filed. Within hours of the FTC vote, global tax services firm Ryan filed a lawsuit in the Northern District of Texas, seeking to "prevent the immense, undue burdens the FTC’s rule would impose on service-driven companies of every size nationwide." One day later, the U.S. Chamber of Commerce filed a complaint against the FTC in federal court, requesting an injunction to stop the agency from enforcing the #noncompete rule. The U.S. Chamber called the ban “not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive.” If the courts grant an injunction while the validity of the ban is determined, it could be many months before the rule becomes effective. If the FTC rule is struck down, legal oversight of non-compete agreements would revert to state law. How does the FTC ban affect Texas businesses? For now, employers can keep using non-compete agreements in Texas but should prepare to adjust their practices if the legal challenges are resolved and the final rule becomes official. "For our corporate clients, we’re still encouraging them to assess whether non-competes are something that they want to keep in place," says Raymond Panneton, business attorney and shareholder at Hendershot Cowart P.C. This article reviews what Texas businesses and their employees need to know about the FTC non-compete ban, key exceptions to the rule, and alternatives to non-compete agreements employers can use now to protect confidential information: https://lnkd.in/gP8Sd__B #businesslaw #SMBtips #Texasbusiness #Texasattorney

Just months ago all the buzz was about the federal ban on Non-Competes. Now... A federal ruling on July 3 by US District Court Judge Ada Brown determined that the FTC does not have the authority to issue a nationwide ban on non-compete agreements. This decision likely means the FTC's proposed ban is effectively dead. Judge Brown's preliminary decision strongly indicated she would ultimately block the ban, with a final ruling expected on August 30. This case may be appealed to the US Supreme Court, but the recent Loper Bright decision, which limits deference to federal agency interpretations (Chevron deference), makes the success of an FTC appeal unlikely. Judge Brown's ruling emphasized that states have historically regulated non-competes and that no federal law broadly addresses their enforceability. She criticized the FTC's rule as overbroad and arbitrary. The judge also indicated that any such restriction should come from Congress, though experts believe congressional action is unlikely due to political dynamics. While the federal ban is likely dead, several states, including California and Rhode Island, have their own bans or limitations on non-competes, resulting in a patchwork of regulations across the country. Predictions: Patchwork of State Regulations: With the federal ban likely blocked, states will continue to create and enforce their own non-compete regulations, leading to a patchwork of laws. This will result in varying rules depending on the state, complicating compliance for national businesses and increasing litigation over jurisdictional issues. Increased Congressional Pressure: Although experts doubt immediate congressional action, the ruling and resulting patchwork may eventually lead to increased pressure on Congress to address non-competes at a federal level, especially if businesses and workers push for more consistent regulations. Corporate Policy Adjustments: Companies operating in multiple states will need to adjust their employment contracts to comply with varying state laws. This could lead to more tailored non-compete agreements or the increased use of alternative protections, such as non-disclosure agreements (NDAs) and non-solicitation clauses, to protect business interests while avoiding legal challenges. https://lnkd.in/d3WT7dTx

California employers are just one week away from an important deadline imposed by AB1076. Companies whose contracts include a noncompete clause must notify all current employees, and former employees who were employed after Jan. 1, 2022, that the clauses are void and will not be enforced. Littler’s Walt Pfeffer, Joy Rosenquist and Bruce Sarchet outline what steps employers must take before Feb. 14, 2024, here: https://bit.ly/4bESyUf https://lnkd.in/gd-xR3uX