The FTC finds itself embroiled in the FTC non-compete lawsuit filed by businesses as the main plaintiff. Business in their lawsuit challenges the FTC authority in enacting the rule of banning non competent agreements. In July 2024 a federal court in Texas blocked the FTC from enforcing the ban albeit temporarily. While giving the ruling, the judge said that the FTC does not have the authority needed for implementing such a ban.
This ruling by the court extends to the plaintiffs in the lawsuit but not all the employees countrywide. The court is expected to give a final order on the lawsuit on or before 30th August 2024.
The Basis of the FTC Non-Compete Lawsuit
The basis of the ftc non complete lawsuit was the adoption of the new two thirds vote which prohibited lawyers from entering into non-compete agreements with employees. This rule required all employers to rescind all the existing none competes. The rule was expected to take effect on September 4th 2024 applying to all business with the exception of those businesses that the FTC has no jurisdiction over like all the non-profit making organizations and federal credit unions.
Following the FTC ban ruling many parties especially businesses were aggrieved forcing them to seek legal redress to the matter. These aggravations resulted in the ftc non compete lawsuit which was filled in the U.S district court. The case drew a lot of interest from many parties including the U.S chamber of commerce and advocacy groups.
The Core Issue FTC Non-Compete Lawsuit
The bone of contention in the ftc non compete lawsuit is whether the FTC ban exceeds the rulemaking authority of the body. This matter was taken to court for clarification and the judge sided with the plaintiff in the lawsuit. In so doing, the judge issued a preliminary injunction which prohibited the FTC from enforcing its new rule.
However, this injunction is only temporary pending a full hearing and ruling on this matter later this year. This temporary ruling does not also directly affect the other businesses in the state of Texas and other states like New York. Although the district court has a limited jurisdiction, the court has promised to enter into a decision on merits of the case in its ruling later this year.
The Plaintiff Settlement Demand in The ftc non compete lawsuit
Unlike other lawsuits, the plaintiffs in the ftc non compete lawsuit are not looking for monetary settlement in the lawsuit. Instead, the plaintiffs in this case are seeking for a reversal on the FTC vote ban. Already the court has put brakes on this ban albeit a temporary ban that will lapse later this year when a lasting ruling on the matter is issued. Â There is also another lawsuit that has been filed in the Eastern Pennsylvania court which has promised to give a ruling on the matter on 23rd June 2024.
The Current Status of the Lawsuit
The lawsuit is currently in court with a temporary decision having been issues by the district court. Â There will be another hearing on the issue towards the end of this year which will provide further clarity on whether the FTC ban will stand or will be quashed.
