The FTC's nationwide rule banning non-competes is set aside, but dealers need to follow state law when it comes to noncompete agreements
September 19, 2024
By Barrie Charapp Beaty
Charapp & Weiss, LLP
bbeaty@cwattorneys.com
On Aug. 20, 2024, the United States District Court for the Northern District of Texas granted the Plaintiff’s motion for summary judgment and concluded that the FTC exceeded its statutory authority in the creation of the Non-Compete Rule, and since the rule was held to be arbitrary and capricious, the rule must be set aside nationwide. Thus, the FTC’s nationwide rule banning non-competes is set aside, but dealers need to follow state law when it comes to noncompete agreements.
Generally, courts do not favor non-competition agreements that truly hinder an employees’ ability to seek work in their trade. Dealers should adhere to state law entering into a non-compete with employees. Additionally, dealers still should be carefully crafting any agreements with their employees and prevent the actions that they are most concerned about (i.e., recoupment of training costs, confidentiality, trade secrets, or solicitation of customers) when an employee departs, and the agreement should not function as preventing that employee from seeking work in his or her trade.
Follow the story. Read Barrie's update for dealers on non-competes from earlier this summer.