Further to last week’s report, numerous firms summarizing the U.S. District Court for the Northern District of Texas decision enjoining the effectiveness and enforcement of the FTC’s new noncompete rule also sought to address the logical follow-on question: “Now what?” While an FTC appeal to the Fifth Circuit is at least possible (if not likely), for now, companies need not be concerned about near-term compliance, and many firms have expressed skepticism about the FTC’s chances on appeal (assuming the FTC goes that route) in the context of the composition of the Fifth Circuit and the recent Loper Bright decision.
However, firms caution companies that the FTC may still address allegedly overbroad or otherwise unlawful noncompetes on a case-by-case basis in the context of its enforcement of the antitrust laws and that states are increasingly imposing restrictions on noncompetes, as shown on this State Noncompete Law Tracker.
Finally, firms observe that other pending litigation regarding the validity and enforceability of the FTC rule could ultimately trigger a review by the US Supreme Court.