Hugh Murray, Chair of McCarter’s Labor & Employment Practice, discussed with Power Progress how a recent ruling in the US District Court for the Eastern District of Pennsylvania adds uncertainty as to whether the Federal Trade Commission’s (FTC’s) ban on noncompete agreements will go into effect on September 4, 2024. In ATS Tree Services, LLC v. Federal Trade Commission, et al., the court denied plaintiffs’ motion to postpone the effective date of the US Federal Trade Commission’s (FTC’s) ban on noncompete agreements, ruling that ATS “has failed to establish a reasonable likelihood that it will succeed on the merits of its claims that the FTC lacks substantive rulemaking authority under its enabling statute.” This ruling came on the heels of a US District Court for the Northern District of Texas last month issuing an opposite finding in granting a motion to postpone the effective data of the FTC ban. “The Texas court has indicated that it will rule on the plaintiffs’ request for a permanent injunction by the end of August, and that could end up being a broader injunction than the preliminary injunction it already issued,” Hugh said. “There is also a significant likelihood that any injunction out of the Texas court will be limited in scope to the parties.” Hugh noted that the Pennsylvania court has directed the parties to submit a joint status report laying out proposed next steps, but that it’s unclear when a final ruling will occur.
8.5.2024