Texas Federal Judge Grants Preliminary Injunction Against FTC's Noncompete Rule

Jul 3, 2024, 10:00 PM

A federal judge in Texas has granted a preliminary injunction against the Federal Trade Commission's (FTC) rule banning noncompete agreements, limiting the injunction to the named plaintiffs in an APA challenge, citing the rule as likely contrary to law and arbitrary and capricious. The rule, which was set to go into effect in September, has faced significant opposition. FTC Commissioner AFergusonFTC and MHolyoakFTC expressed strong dissent, arguing that the rule constitutes an illegal overreach and violates the Constitution. The ruling comes amid broader debates on the FTC's regulatory powers, particularly in light of the recent rejection of Chevron deference by the courts, which further weakens the FTC's position. This decision represents a major setback for the FTC's efforts to expand its regulatory authority over noncompete agreements across the United States.