As widely predicted, U.S. District Court Judge Dana Brown granted Ryan, LLC’s motion for a preliminary injunction against the Federal Trade Commission’s (FTC) Final Rule banning noncompetes. In her July 3, 2024 opinion, Judge Brown found that the FTC “lacks substantive rulemaking authority with respect to unfair methods of competition.” She also enjoined the FTC from implementing or enforcing the Final Rule against the parties in that case, which included the plaintiff Ryan, LLC, the U.S. Chamber of Commerce and the Business Roundtable.

But while employers may cheer that decision, their noncompetes are not out of the proverbial woods yet. To date, Judge Brown has declined to issue a nationwide injunction prohibiting the FTC from enforcing its rule against other parties. This means that the FTC may still try to enforce its Final Rule against other employers who are not parties to that lawsuit. The FTC’s Final Rule becomes effective Wednesday, September 4, 2024 and it requires employers to provide a notice to current and former employees that their noncompetes are no longer enforceable. Given that impending deadline, many employers are concerned about the uncertainty left by Judge Brown’s decision. However, as explained below, the Final Rule may provide cover for employers under a “good faith” exception.Continue Reading Worried about the Current Uncertainty Over the FTC’s Noncompete Ban? How the FTC’s “Good Faith” Exception May Provide Cover to Employers