On August 20, 2024, a U.S. federal district court judge issued an order prohibiting the Federal Trade Commission (FTC) from enforcing its new rule, effectively banning almost all noncompete agreements. The rule was scheduled to become effective September 4, 2024, unless struck down, as noted in this previous FTC noncompete ban blog.
The judge concluded that the FTC lacked authority to create the rule and the rule is unreasonably overbroad without reasonable explanation. In response, the FTC has said that it is seriously considering a potential appeal. 
Though stranger things have happened, we do not anticipate that an appeal to the Fifth Circuit Court of Appeals will be successful for the FTC noncompete ban. In addition, we believe that any further appeal to the U.S. Supreme Court would likely suffer the same fate. However, only time will tell.
In the meantime, noncompetes remain enforceable as permitted under most, but not all, state laws. However, even where they remain enforceable, they may be subject to limitations and ever increasing scrutiny by courts. Just recently in PA, the July passage of House Bill 1633 limited noncompete agreements in the healthcare industry to one year, with exceptions of course.
Employers in all industries should review their noncompetes in conjunction with experienced counsel in light of these developments. Our employment attorneys in Allentown, PA are ready to provide legal guidance on these issues and more.
