Little Health Law Blog
Our healthcare and business law firm guides many medical practices and physicians through employment matters. At this point, most people are aware that the Federal Trade Commission (“FTC”) published its final non-compete rule (“Non-Compete Rule”) on April 23, 2024. Our firm previously posted 3 Facts about the Non-Compete Rule, which provides information about the FTC Rule including that it limits non-competes both prospectively and retrospectively, applies to all workers with one limited exception, and that current non-compete disputes may still continue even if the Non-Compete Rule becomes effective. On August 20, 2024, a judge blocked the FTC from enforcing the Non-Compete Rule, and this post discusses that decision. If you need assistance with employment matters or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@littlehealthlaw.com. You may also learn more about our law firm by visiting www.littlehealthlaw.com.
Legal Challenges
The Non-Compete Rule was set to become effective on September 4, 2024 despite many challenges. Those challenges were Ryan, LLC v. FTC in the U.S. District Court for the Northern District of Texas, ATS Tree Services, LLC v. FTC in the U.S. District Court for the Eastern District of Pennsylvania, and Properties of the Villages, Inc. v. FTC in the U.S. District Court for the Middle District of Florida.
- Preliminary Court Orders
On July 3, 2024, the Judge in Ryan issued a preliminary injunction enjoining the Non-Compete Rule from going into effect but only as to the plaintiff in that lawsuit by preliminarily finding that the Non-Compete Rule exceeded the FTC’s authority and was arbitrary and capricious. Then, on July 23, 2023 the judge in ATS Tree Services denied the plaintiff’s motion for a preliminary injunction by finding that the plaintiff failed to establish irreparable harm and “failed to establish a reasonable likelihood that it will succeed on the merits of its claims that the FTC lack substantive rulemaking authority under its enabling statute, that the FTC exceeded its authority, and that Congress unconstitutionally delegated legislative power to the FTC.” On August 14, 2024, the judge in Properties of the Villages issued another employer-friendly ruling by issuing a preliminary injunction enjoining the Non-Compete Rule from going into effect but, again, only as to the plaintiff in the lawsuit.
- August 20, 2024 Decision in Ryan
At this point, there were preliminary decisions for and against the Non-Compete Rule and we were awaiting final decisions by these courts. On August 20, 2024, the Texas judge in Ryan granted the plaintiff’s motion for summary judgement and ordered that the “Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024 or thereafter.” In making this decision, the judge determined that “the FTC exceeded its statutory authority in implementing the Rule, and the Rule is arbitrary and capricious.”
What’s Next?
As to Ryan, FTC spokesperson Victoria Graham told ABC News: “We are seriously considering a potential appeal. The FTC’s website also provides that: “The FTC is considering an appeal. The decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.” “Noncompetes: What you Should Know,” www.FTC.gov. The other lawsuits challenging the Non-Compete Rule are still pending; neither has reached a final decision.
There is likely still much to come regarding the Non-Compete Rule. If you need assistance with employment matters or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@littlehealthlaw.com. You may also learn more about our law firm by visiting www.littlehealthlaw.com.