Litigation Seeks to Stay FTC’s Noncompete Ban: Court Guidance Expected on or Before July 3

If you tuned into our webinar on May 3, you likely heard about the pending legal challenges to the Federal Trade Commission’s (FTC’s) noncompete ban, slated to go into effect September 4. These legal challenges could result in a partial or complete stay of the ban, which could eliminate the requirement for employers to revise agreements and provide “workers” with the required notice. For employers adopting a wait-and-see approach before making substantial revisions to existing agreements, this update covers some critical developments and identifies upcoming deadlines to be aware of.

To summarize, there are three pending legal challenges to the FTC’s noncompete ban:

1. Ryan LLC v. FTC, No. 24-cv-00986-E (N.D. Tex.) (Brown, J.)
2. Chamber of Commerce et al. v. FTC, No. 24-cv-00148 (E.D. Tex.) (Barker, J.)
3. ATS Tree Services LLC v. FTC, No. 24-cv-01743 (E.D. Pa.) (Hodge, J.)

At the time of our webinar, Chamber of Commerce was the case furthest along. Judge J. Campbell Barker advanced trial on the merits and consolidated it with the preliminary injunction hearing, with briefing to be completed by June 19. Just hours after our webinar, however, Judge Barker issued an order staying the case under the first-to-file doctrine in favor of the Ryan case.

With all focus now on the Ryan court, there are several notable orders and deadlines to be aware of. Yesterday, the Ryan court denied Ryan’s Motion for Expedited Briefing Regarding its Motion for Stay of Effective Date and Preliminary Injunction and ordered that the FTC file its opposition to Ryan’s Motion for Stay of Effective Date and Preliminary Injunction (the Motion) by May 22. Ryan may respond to the FTC’s opposition by June 5. And, to the extent the court determines that a hearing is necessary, the court set that hearing date for June 17. The court will notify the parties on or before June 6 if it believes a hearing is necessary. Critically, the court committed to issuing a decision on the merits of Ryan’s Motion by July 3.

This development is important for all employers impacted by the FTC’s ban, but particularly so for those employers waiting to see how litigation unfolds before revising agreements. Provided that the parties and the court adhere to the dates published in the court’s order, employers will have more guidance on whether they need to begin preparing for the rule’s implementation on or by July 3.