by Jillian Pollock, Buckley Law P.C.
Update on Non-Compete Agreements
On August 20, 2024, Judge Brown of the United States District Court for the Northern District of Texas issued a permanent injunction that blocks a Federal Trade Commission (FTC) rule banning most noncompete agreements from taking effect. The injunction is nationwide in scope. The injunction was issued in Ryan, LLC v. Federal Trade Commission.
Brief Description of the FTC Rule
The FTC Rule had been scheduled to go into effect on September 4, 2024. The FTC Rule was broad in scope and would have banned non-compete agreements between employers and workers in the United States except in limited circumstances. In addition to preventing employers from entering into new non-compete agreements as of September 4, 2024, the Rule would also have required employers to notify non-excepted employees that existing non-competes would not be enforced.
In issuing the permanent injunction, Judge Brown found that the FTC exceeded its statutory authority in implementing the Rule. Because of injunction, the FTC cannot implement or enforce the Rule. An appeal is expected.
What This Means for Businesses
The practical effect of the injunction is to preserve the status quo pending an appeal. Employers can continue to enter into non-compete agreements with employees and to enforce existing non-compete agreements so long as the non-compete agreements comply with applicable state law. Oregon employers are reminded that the Oregon legislature has imposed significant restrictions on non-compete agreements over the past years.
Lastly, neither the FTC Rule nor Oregon law prohibit employers from entering into non-disclosure agreements to protect confidential, proprietary information and trade secrets belonging to the business or from entering into non-solicitation agreements that prohibit employees from soliciting the business’s clients, customers, or other employees for a period of time.
Employers should consult with legal counsel for advice on compliance with applicable state law. If you have questions or need legal assistance on employment law, please contact Buckley Law attorneys Jillian A. Pollock or William E. Gaar at 503-620-8900.
Jillian Pollock is a shareholder in the firm’s employment law practice group. Her practice includes representing employers in federal and state court proceedings and in administrative proceedings. Her practice also includes employment counseling.
This material is provided for informational purposes only. The provision of this material does not create an attorney-client relationship between the firm and the reader, and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel. Do not take action in reliance on the contents of this material without seeking the advice of counsel.