The Federal Trade Commission announced it will appeal a Texas federal court’s decision blocking its non-compete ban from being implemented nationwide. In August, US District Judge Ada Brown ruled that the FTC lacked the authority for such a sweeping ban.
The new rule, first announced in April, aimed to void most non-compete agreements, except for less than 0.75% of senior executives earning over $151,164, which have been a point of contention for many in the radio industry. Judge Brown halted the rule days before it would have gone into effect on September 4 in the decision of Ryan LLC v. Federal Trade Commission.
Judge Brown had previously delayed the ban’s implementation with an injunction.
The battle now goes to the US Court of Appeals for the Fifth Circuit. The deadline for the FTC’s brief is November 4, with the opposition response due 30 days later.
This is the second appeal for the FTC over the non-compete ban, which is also challenging a similar ruling from a Florida court. Meanwhile, a Pennsylvania court had sided with the FTC, rejecting claims from ATS Tree Services that the ban would cause irreparable harm. The company later withdrew its lawsuit.
Given the conservative nature of the Fifth Circuit, a reversal is not expected.
Society for Human Resource Management Chief of Staff Emily Dickens commented, “We are optimistic that the Court of Appeals will reach a similar conclusion and set aside the attempt at a widespread ban on non-competes. As we have been from the very beginning, we stand ready to continue our advocacy efforts on this issue.”
