On Friday, October 18, 2024, we learned that the FTC has appealed the federal judge’s non-compete injunction. Recall that the Federal Trade Commission had issued a rule in April 2024 that would ban non-compete agreements across the entire nation. [Read More: FTC Proposes Rule that Would Ban Non-Competes Nationwide] As I wrote on August 21, 2024, he federal court in Texas ruled that the non-compete ban was not a rule that the FTC has the authority to create. The court therefore issued a nationwide injunction against the Federal Trade Commission’s noncompete ban. [Read more: The FTC’s Ban on Non-Competes is Dead] That noncompete ban would have gone into effect on September 4, but the court’s injunction blocked the implementation and enforcement of the ban. Since August, we’ve been waiting to see whether the FTC would appeal the court’s injunction. Now we know that the FTC will be appealing the court’s ruling after all.
How Long Will the FTC’s Appeal Take?
The appeals process is long and moves very slowly. Most appeals–from the filing of a notice of appeal to the final decision of the appellate court–take well more than a year to work their way through the system. The FTC has already told a Pennsylvania court (about a separate case that also attacked the FTC’s non-compete ban) that the FTC expects the appellate process in the Texas federal case to take over a year to get a final order from the appellate court.
In September 2024, the FTC appealed a Florida federal court’s ruling that had also issued a preliminary injunction. That appeal will make its way through the Eleventh Circuit Court of Appeals.
If both appellate courts rule against the FTC, then the FTC still has the option to seek judicial review by the U.S. Supreme Court. Such a case, however, would be several years away from being heard by the justices. In the meantime, if a Republican wins the White House in November, then the FTC chairperson would likely be replaced and the rule’s appeal likely dropped.
Does the Fact that the FTC Appealed the Non-Compete Injunction Affect South Carolina Employees?
As always for my practice and my South Carolina clients, the question remains: does any of this legal wrangling affect their non-compete obligations?
The answer is no, not at this point. I’m still having clients raise the FTC ban in consultations with me as a sort of “Oh, none of this really matters, right, since non-competes have been banned?” But for South Carolina employees, all non-compete agreements still need to be reviewed by a South Carolina non-compete lawyer to see whether or not the specific non-compete provision complies with South Carolina law. [Read More: Meet Jeremy R. Summerlin] SC judges don’t like non-competes, but they will enforce them IF they are carefully and narrowly written to meet the law’s requirements.
I recommend that you always have an employment lawyer review your non-compete agreement before you sign it so that you know how the contract will impact your ability to get another job in the future. [Read More: Reviewing SC Non-Compete and Non-Solicit Agreements] Or, if you’ve already signed it and are looking to leave, you need to know what job you can take that won’t run afoul of the agreement, assuming it’s enforceable at all. Or, if you’ve already left and taken a job that potentially violates the agreement, you need to know what your legal options are in the event you and your new employer get sued and are facing a non-compete injunction. [Read More: Fighting a Non-Compete Injunction in South Carolina]
Ultimately, these types of restrictive covenant agreements (non-competes and non-solicits) can have major implications for your future employment. Make sure you understand what you’re getting into beforehand. I’m here to help wherever I can. Give our office a call at (864) 233-4351 or reach out to us via our Contact Us page. [Link here: Speak to an Attorney]
