Trade Secrets & Employee Mobility

The United States Courts of Appeals for the Fifth and Eleventh Circuits will have their chance to weigh in on the FTC’s Noncompete Ban, which had been scheduled to go into effect on September 4, 2024, but was enjoined a couple of weeks before that date.

First, the Fifth Circuit.  The FTC Noncompete Ban was blocked on a nationwide basis on August 20, 2024, when the United States District Court for the Northern District of Texas issued a memorandum opinion and order in Ryan LLC v. Federal Trade Comm’n, Case No. 3:24-cv-00986-E, granting the plaintiff’s motion for summary judgment and setting aside the Ban.  On October 18, 2024, the FTC filed a Notice of Appeal of the opinion and order to the Fifth Circuit.  The FTC Noncompete Ban remains enjoined during the pendency of this appeal.

In addition to the Fifth Circuit appeal, the FTC is taking a second bite at the proverbial apple, in the Eleventh Circuit.  On August 15, 2024, in Properties of the Villages, Inc. v. Federal Trade Commission, Case No. 5:24-cv-316, the United States District Court for the Middle District of Florida granted the plaintiff’s motion for a preliminary injunction (although limited in scope only to the plaintiff), prohibiting the FTC from enforcing the Noncompete Ban.  This was similar to how the U.S. District Court in Texas had previously ruled, on Ryan LLC’s preliminary injunction motion.  On September 24, 2024, the FTC filed a Notice of Appeal of the Florida District Court’s preliminary injunction to the Eleventh Circuit.

Last week, employers who use noncompetes got more good news with respect to the Federal Trade Commission’s proposed noncompete ban.

As readers of this blog are probably aware, back in August, the FTC’s noncompete ban was blocked when the United States District Court for the Northern District of Texas issued a memorandum opinion and order in Ryan LLC v. Federal Trade Comm’n, Case No. 3:24-cv-00986-E, granting the plaintiff’s motion for summary judgment and setting aside nationwide the FTC’s noncompete ban that was scheduled to go into effect on September 4, 2024.

Employers who use noncompetes may have breathed a sigh of relief with the Texas Court’s ruling, but a small doubt of uncertainty lingered.  Could another court reach the opposite decision and rule that the FTC noncompete ban may go into effect?

Two other federal lawsuits (one in Pennsylvania and one in Florida) challenging the FTC noncompete ban remained pending, and each had ruled upon a motion for a preliminary injunction regarding the FTC noncompete ban.  Like the Court in Texas, in Properties of the Villages, Inc. v. Federal Trade Commission, Case No. 5:24-cv-316 (M.D. Fla.), the Florida Court granted the plaintiff’s motion for a preliminary injunction (although limited in scope only to the plaintiff), and seemed likely to reach a final decision on the merits in line with the Texas Court. 

As featured in #WorkforceWednesday®: This week, we’re examining the repercussions for employers of a recent court decision that set aside the Federal Trade Commission’s (FTC’s) nationwide non-compete ban:

On August 20, 2024, the U.S. District Court for the Northern District of Texas blocked the FTC’s ban on non-compete agreements nationwide. What does this mean for employers?

Epstein Becker Green attorney Peter A. Steinmeyer tells us what employers should be doing now and outlines the implications of this decision on existing and future non-compete agreements.

On July 17, 2024, Governor Josh Shapiro approved Pennsylvania’s first statute imposing limitations on the use of noncompetes in the state. The Fair Contracting for Health Care Practitioners Act (the “Act”) prohibits the enforcement of certain noncompete covenants entered into by health care practitioners and employers. Here are the key points of the Act:

• The Act’s effective date is January 1, 2025.
• Subject to certain exceptions, a “noncompete covenant” entered into after January 1, 2025 is “deemed contrary to the public policy and is void and unenforceable by an employer.”
• A “noncompete covenant” is defined as an “agreement that is entered into between an employer and a health care practitioner in this Commonwealth which has the effect of impeding the ability of the health care practitioner to continue treating patients or accepting new patients, either practicing independently or in the employment of a competing employer after the term of employment.”

Last summer, the New York State legislature made waves when it passed a bill that effectively would have banned noncompete agreements.  New York’s Governor vetoed that bill in late December 2023.  This year, however, it is expected that the legislature will consider, and maybe pass, a less draconian bill that the Governor may be more likely sign.  Instead of an outright ban, such a bill might limit the use of noncompetes by, for example, prohibiting noncompetes only for certain types of employees, such as low wage earners.

While the business and legal communities await the state ...

2023 started off with a bang, and it is certainly not ending with a whimper. On January 4, 2023, the Federal Trade Commission (FTC) announced the settlement of two enforcement actions against employers arising out of their use and enforcement of noncompetes. The very next day, the FTC proposed a rule that would ban noncompetes nationwide if enacted (which we do not believe will ever happen), with only a very narrow exception for noncompetes entered into in connection with the sale of a business.

The year only continued to get more turbulent in this area of law, with Minnesota banning ...

As featured in #WorkforceWednesday:  New York State’s noncompete ban has passed both houses of the state legislature and now awaits Governor Kathy Hochul’s signature.

Epstein Becker Green attorney David J. Clark details how this proposed ban would affect employers and reveals how noncompete bans have become a growing trend throughout the country.

The Federal Trade Commission (FTC) has announced that it will be hosting a public forum on February 16, 2022, from 12:00-3:00 p.m. ET, to discuss its proposed nationwide noncompete ban. The forum is intended to supplement the FTC’s request for written comments, which as of today have exceeded 10,000. According to the FTC, “[t]he commission will hear from a series of speakers who have been subjected to noncompete restrictions, as well as business owners who have experience with noncompetes.” It is unclear whether any of the “business owners who have experience with ...

As we predicted, earlier today, 100 industry organizations submitted a request to the Federal Trade Commission (FTC) to extend the comment period for its proposed rule banning noncompetes nationwide by an additional 60 days. According to the letter, “[t]he regulated community should be given sufficient time to assess the potential consequences of the rulemaking and develop insightful comments for the Commission to consider.” The letter further states: