Federal Judge Says No to FTC’s Non-Compete Ban

Back in April, the Federal Trade Commission (FTC) issued a new rule banning nearly all non-compete agreements across the United States. The news was good for employees, who are often harmed by non-compete agreements. In issuing the rule, the FTC emphasized that employees would have more freedom, and there would be more competition in the economy. However, almost immediately, the new rule was contested. A lawsuit was filed in a federal court in Texas, and the judge in that case said the FTC’s non-compete ban could not take effect, as it was supposed to on September 4, 2024. Our Palm Beach Gardens employment lawyers can tell you more about the case and what you should know about the enforceability of non-compete agreements in Florida.

Details of the Ruling Against the FTC 

The FTC’s ban on non-compete agreements was set to take effect on September 4, 2024, but federal judge Ada Brown in the US District Court for the Northern District of Texas ruled that the ban could not take effect. According to NPR reporting on the case, the judge “wrote that the federal agency [the FTC] had overstepped its power when it approved the ban.”

Specifically, she wrote, “the FTC lacks substantive rulemaking authority with respect to unfair methods of competition.” Further, Brown reasoned, “the role of an administrative agency is to do as told by Congress, not to do what the agency think[s] it should do.” The FTC indicated that it was considering an appeal, and that it would “keep fighting to stop non-competes.”

For now, there is no non-compete ban, and employees in Florida can be required to comply with non-compete agreements that meet the requirements for enforceability under state law.

Can My Employer Require Me to Comply with a Non-Compete Agreement? 

The recent ruling from the federal court in Texas means that the FTC’s broad ban on non-compete agreements will not be able to stand. However, this does not mean that your employer can necessarily require you to comply with a non-compete agreement that is part of your employment contract or a separate agreement. Under Florida law, in order for a non-compete agreement to be enforceable, it has to be reasonable in how it restricts an employee in terms of duration or time (how long you are restricted for), geographic area (where you are restricted), and scope (what type of business you are restricted from).

Employers must have a legitimate business interest in requiring the non-compete agreement, and the agreement must be reasonable in all of the three ways described above. Otherwise, any non-compete agreement you signed may not be enforceable against you.

Contact a Palm Beach Gardens Employment Lawyer 

Given that the rules concerning non-compete agreements have been unsettled recently, it is often difficult for employees to know what their rights and obligations are with regard to any type of restrictive covenant in an employment contract. If you have any questions or concerns, or if you need help negotiating the terms of an agreement with your employer, you should get in touch with an experienced Palm Beach Gardens non-compete agreement attorney at Sconzo Law Office today for assistance.

Sources:

npr.org/2024/08/21/g-s1-18376/federal-judge-tosses-ftc-noncompetes-ban

leg.state.fl.us/STATUTES/index.cfm?App_mode=Display_Statute&URL=0500-0599/0542/0542.html