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The Status of the FTC's Non-Compete Rule in the Fifth Circuit

The Federal Trade Commission (“FTC”) issued a near comprehensive ban on non-compete clauses on May 7, 2024, in its final Non-Compete Clause Rule (“Non-Compete Rule”). The Non-Compete Rule was set to take effect on September 4, 2024. However, litigation halted the implementation of the Non-Compete Rule.

On August 20, 2024, in Ryan LLC, et al. v. Federal Trade Commission, No. 24-cv-986 (N.D. Tex.), United States District Judge Ada Brown handed down an order with nationwide effect, setting aside the Non-Compete Rule. Judge Brown decided that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and she further deemed the Non-Compete Rule arbitrary and capricious under the Administrative Procedure Act. According to the district court’s order, the Non-Compete Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. The FTC then appealed the district court’s order to the United States Court of Appeals for the Fifth Circuit.

While the FTC appealed the ruling, the Trump administration has frozen the appeals. After designating Andrew N. Ferguson – a member of the FTC who voted against the Rule – as the new FTC chairman on the first day of his second term, President Trump and the federal government filed an unopposed motion to stay the appeal for 120 days on March 7, 2025. This motion is premised on a public statement by Chair Ferguson taking the position that the FTC may need to consider whether to continue defending the Non-Compete Rule. The Fifth Circuit granted the government’s motion on March 12, 2025, and the abeyance remained in effect until July 10, 2025, at which point the government was to provide an update to the court. The government filed a Status Report and unopposed motion to hold the appeal in abeyance for 60 additional days, citing “significant personnel changes, including the Senate confirmation of commissioner Mark Meador,” and promising a status report on September 8, 2025.  Unless and until the court of appeals orders otherwise, the district court’s order setting aside the Non-Compete Rule will remain in effect nationwide. Business and legal experts expect the government to abandon the appeal and/or rescind the Non-Compete Rule.

Aside from the ongoing litigation at the federal level, employers are still required to comply with state laws and regulations when utilizing non-compete agreements.

The Status of the FTC's Non-Compete Rule in the Fifth Circuit

The Federal Trade Commission (“FTC”) issued a near comprehensive ban on non-compete clauses on May 7, 2024, in its final Non-Compete Clause Rule (“Non-Compete Rule”). The Non-Compete Rule was set to take effect on September 4, 2024. However, litigation halted the implementation of the Non-Compete Rule.

On August 20, 2024, in Ryan LLC, et al. v. Federal Trade Commission, No. 24-cv-986 (N.D. Tex.), United States District Judge Ada Brown handed down an order with nationwide effect, setting aside the Non-Compete Rule. Judge Brown decided that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and she further deemed the Non-Compete Rule arbitrary and capricious under the Administrative Procedure Act. According to the district court’s order, the Non-Compete Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. The FTC then appealed the district court’s order to the United States Court of Appeals for the Fifth Circuit.

While the FTC appealed the ruling, the Trump administration has frozen the appeals. After designating Andrew N. Ferguson – a member of the FTC who voted against the Rule – as the new FTC chairman on the first day of his second term, President Trump and the federal government filed an unopposed motion to stay the appeal for 120 days on March 7, 2025. This motion is premised on a public statement by Chair Ferguson taking the position that the FTC may need to consider whether to continue defending the Non-Compete Rule. The Fifth Circuit granted the government’s motion on March 12, 2025, and the abeyance remained in effect until July 10, 2025, at which point the government was to provide an update to the court. The government filed a Status Report and unopposed motion to hold the appeal in abeyance for 60 additional days, citing “significant personnel changes, including the Senate confirmation of commissioner Mark Meador,” and promising a status report on September 8, 2025.  Unless and until the court of appeals orders otherwise, the district court’s order setting aside the Non-Compete Rule will remain in effect nationwide. Business and legal experts expect the government to abandon the appeal and/or rescind the Non-Compete Rule.

Aside from the ongoing litigation at the federal level, employers are still required to comply with state laws and regulations when utilizing non-compete agreements.

The Status of the FTC's Non-Compete Rule in the Fifth Circuit

The Federal Trade Commission (“FTC”) issued a near comprehensive ban on non-compete clauses on May 7, 2024, in its final Non-Compete Clause Rule (“Non-Compete Rule”). The Non-Compete Rule was set to take effect on September 4, 2024. However, litigation halted the implementation of the Non-Compete Rule.

On August 20, 2024, in Ryan LLC, et al. v. Federal Trade Commission, No. 24-cv-986 (N.D. Tex.), United States District Judge Ada Brown handed down an order with nationwide effect, setting aside the Non-Compete Rule. Judge Brown decided that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and she further deemed the Non-Compete Rule arbitrary and capricious under the Administrative Procedure Act. According to the district court’s order, the Non-Compete Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. The FTC then appealed the district court’s order to the United States Court of Appeals for the Fifth Circuit.

While the FTC appealed the ruling, the Trump administration has frozen the appeals. After designating Andrew N. Ferguson – a member of the FTC who voted against the Rule – as the new FTC chairman on the first day of his second term, President Trump and the federal government filed an unopposed motion to stay the appeal for 120 days on March 7, 2025. This motion is premised on a public statement by Chair Ferguson taking the position that the FTC may need to consider whether to continue defending the Non-Compete Rule. The Fifth Circuit granted the government’s motion on March 12, 2025, and the abeyance remained in effect until July 10, 2025, at which point the government was to provide an update to the court. The government filed a Status Report and unopposed motion to hold the appeal in abeyance for 60 additional days, citing “significant personnel changes, including the Senate confirmation of commissioner Mark Meador,” and promising a status report on September 8, 2025.  Unless and until the court of appeals orders otherwise, the district court’s order setting aside the Non-Compete Rule will remain in effect nationwide. Business and legal experts expect the government to abandon the appeal and/or rescind the Non-Compete Rule.

Aside from the ongoing litigation at the federal level, employers are still required to comply with state laws and regulations when utilizing non-compete agreements.

The Status of the FTC's Non-Compete Rule in the Fifth Circuit

The Federal Trade Commission (“FTC”) issued a near comprehensive ban on non-compete clauses on May 7, 2024, in its final Non-Compete Clause Rule (“Non-Compete Rule”). The Non-Compete Rule was set to take effect on September 4, 2024. However, litigation halted the implementation of the Non-Compete Rule.

On August 20, 2024, in Ryan LLC, et al. v. Federal Trade Commission, No. 24-cv-986 (N.D. Tex.), United States District Judge Ada Brown handed down an order with nationwide effect, setting aside the Non-Compete Rule. Judge Brown decided that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and she further deemed the Non-Compete Rule arbitrary and capricious under the Administrative Procedure Act. According to the district court’s order, the Non-Compete Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. The FTC then appealed the district court’s order to the United States Court of Appeals for the Fifth Circuit.

While the FTC appealed the ruling, the Trump administration has frozen the appeals. After designating Andrew N. Ferguson – a member of the FTC who voted against the Rule – as the new FTC chairman on the first day of his second term, President Trump and the federal government filed an unopposed motion to stay the appeal for 120 days on March 7, 2025. This motion is premised on a public statement by Chair Ferguson taking the position that the FTC may need to consider whether to continue defending the Non-Compete Rule. The Fifth Circuit granted the government’s motion on March 12, 2025, and the abeyance remained in effect until July 10, 2025, at which point the government was to provide an update to the court. The government filed a Status Report and unopposed motion to hold the appeal in abeyance for 60 additional days, citing “significant personnel changes, including the Senate confirmation of commissioner Mark Meador,” and promising a status report on September 8, 2025.  Unless and until the court of appeals orders otherwise, the district court’s order setting aside the Non-Compete Rule will remain in effect nationwide. Business and legal experts expect the government to abandon the appeal and/or rescind the Non-Compete Rule.

Aside from the ongoing litigation at the federal level, employers are still required to comply with state laws and regulations when utilizing non-compete agreements.

The Status of the FTC's Non-Compete Rule in the Fifth Circuit

The Federal Trade Commission (“FTC”) issued a near comprehensive ban on non-compete clauses on May 7, 2024, in its final Non-Compete Clause Rule (“Non-Compete Rule”). The Non-Compete Rule was set to take effect on September 4, 2024. However, litigation halted the implementation of the Non-Compete Rule.

On August 20, 2024, in Ryan LLC, et al. v. Federal Trade Commission, No. 24-cv-986 (N.D. Tex.), United States District Judge Ada Brown handed down an order with nationwide effect, setting aside the Non-Compete Rule. Judge Brown decided that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and she further deemed the Non-Compete Rule arbitrary and capricious under the Administrative Procedure Act. According to the district court’s order, the Non-Compete Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. The FTC then appealed the district court’s order to the United States Court of Appeals for the Fifth Circuit.

While the FTC appealed the ruling, the Trump administration has frozen the appeals. After designating Andrew N. Ferguson – a member of the FTC who voted against the Rule – as the new FTC chairman on the first day of his second term, President Trump and the federal government filed an unopposed motion to stay the appeal for 120 days on March 7, 2025. This motion is premised on a public statement by Chair Ferguson taking the position that the FTC may need to consider whether to continue defending the Non-Compete Rule. The Fifth Circuit granted the government’s motion on March 12, 2025, and the abeyance remained in effect until July 10, 2025, at which point the government was to provide an update to the court. The government filed a Status Report and unopposed motion to hold the appeal in abeyance for 60 additional days, citing “significant personnel changes, including the Senate confirmation of commissioner Mark Meador,” and promising a status report on September 8, 2025.  Unless and until the court of appeals orders otherwise, the district court’s order setting aside the Non-Compete Rule will remain in effect nationwide. Business and legal experts expect the government to abandon the appeal and/or rescind the Non-Compete Rule.

Aside from the ongoing litigation at the federal level, employers are still required to comply with state laws and regulations when utilizing non-compete agreements.

The Status of the FTC's Non-Compete Rule in the Fifth Circuit

The Federal Trade Commission (“FTC”) issued a near comprehensive ban on non-compete clauses on May 7, 2024, in its final Non-Compete Clause Rule (“Non-Compete Rule”). The Non-Compete Rule was set to take effect on September 4, 2024. However, litigation halted the implementation of the Non-Compete Rule.

On August 20, 2024, in Ryan LLC, et al. v. Federal Trade Commission, No. 24-cv-986 (N.D. Tex.), United States District Judge Ada Brown handed down an order with nationwide effect, setting aside the Non-Compete Rule. Judge Brown decided that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and she further deemed the Non-Compete Rule arbitrary and capricious under the Administrative Procedure Act. According to the district court’s order, the Non-Compete Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. The FTC then appealed the district court’s order to the United States Court of Appeals for the Fifth Circuit.

While the FTC appealed the ruling, the Trump administration has frozen the appeals. After designating Andrew N. Ferguson – a member of the FTC who voted against the Rule – as the new FTC chairman on the first day of his second term, President Trump and the federal government filed an unopposed motion to stay the appeal for 120 days on March 7, 2025. This motion is premised on a public statement by Chair Ferguson taking the position that the FTC may need to consider whether to continue defending the Non-Compete Rule. The Fifth Circuit granted the government’s motion on March 12, 2025, and the abeyance remained in effect until July 10, 2025, at which point the government was to provide an update to the court. The government filed a Status Report and unopposed motion to hold the appeal in abeyance for 60 additional days, citing “significant personnel changes, including the Senate confirmation of commissioner Mark Meador,” and promising a status report on September 8, 2025.  Unless and until the court of appeals orders otherwise, the district court’s order setting aside the Non-Compete Rule will remain in effect nationwide. Business and legal experts expect the government to abandon the appeal and/or rescind the Non-Compete Rule.

Aside from the ongoing litigation at the federal level, employers are still required to comply with state laws and regulations when utilizing non-compete agreements.