The U.S. District Court for the Northern District of Texas has blocked enforcement of the Federal Trade Commission’s (FTC’s) rule banning virtually all noncompete agreements. The stoppage of the FTC rule applies nationwide. The rule was scheduled to take effect as of September 4 but is now on hold as a result of the August 28 federal district court ruling.

Business interests that oppose the Federal Trade Commission’s (FTC’s) rule that imposes an almost complete ban on noncompete agreements are urging the courts to block the rule. The rule is scheduled to take effect September 4, but a court ruling on it is expected before the end of August.

The Supreme Court decision to overturn the Chevron Doctrine—a 40+-year-old rule that required courts to defer to federal agencies’ “reasonable” interpretations of “ambiguous” statutes—may mean that a sea change in regulatory activity—and possibly legislation—is likely.

A Texas district court has ruled that a challenge to the Federal Trade Commission’s (FTC’s) almost total ban of noncompete agreements will likely succeed, and as a result has issued a limited preliminary injunction for the plaintiffs only, blocking the rule’s September 4 effective date. The court rejected the plaintiff’s request that the injunction apply nationwide.

On April 23, by a 3 to 2 partisan vote, the Federal Trade Commission (FTC) banned virtually all noncompete agreements. There are some limited exceptions involving key executives, but in general, the new rule would not only ban future noncompete agreements, but also require notice to workers who are party to existing noncompete agreements that those agreements will not be enforceable.