Back in May 2024, the federal court judge assigned to the FTC’s non-compete ban case indicated that she would have a hearing on motion for a preliminary injunction by June 17. (I wrote about the FTC’s opposition to that motion here.) However, late last week, the judge issued another order stating that she would not hold a court hearing on that motion. Instead, she will review the written arguments of the parties and make a decision based solely on those submissions.
Further, the judge stated that she would be issuing her ruling on the motion for a preliminary injunction by July 3, 2024. In that ruling, we’ll find out whether the FTC’s non-compete ban rule will be placed on hold while the lawsuit proceeds. If the court denies the motion for an injunction, then the rule will go into effect as originally planned, on September 4, 2024. In that case, companies would have about a month to comply with the rule, which includes notifying employees subject to existing agreements that the non-compete is no longer enforceable.
But if the court grants the motion for a preliminary injunction, then the rule will NOT go into effect, but rather will remain on ice until the court issues a final ruling on the validity of the rule itself. I would expect the parties to appeal in either case, and the matter will ultimately be heard by a higher court. That sort of appeals process can take a very long time, and if there is a transition of power at the presidential election this year, then the new president could have the FTC withdraw the proposed rule anyway.
Lots of moving parts on this case, but the big takeaway now is that we have a definite date for the court’s initial rule, that of July 3, 2024. I’ll provide updates as we go along this merry non-compete adventure together!
