Federal Trade Commission Noncompete Clause Rule Litigation Update

Summary

The Federal Trade Commission on April 23 approved a Final Rule banning almost all worker noncompete clauses (noncompete rule). Absent a court entering a nationwide injunction or vacating the rule, it is set to go into effect on September 4. Several plaintiffs have brought complaints in federal court challenging the noncompete rule's validity. Two federal district courts have issued conflicting preliminary rulings and anticipate issuing final decisions before the noncompete rule's effective date. A third lawsuit is under way, but it is unclear if the court will reach a decision before September 4.