The Federal Trade Commission’s (FTC) landmark decision in April 2024 to largely ban noncompete agreements is currently on hold following an injunction issued by a Texas federal court. The FTC had voted 3-2 to prohibit noncompete clauses in employment contracts, with exceptions for nonprofit organizations, and mandated that companies with existing noncompete agreements inform workers that these agreements are void.  

U.S. District Judge Ada Brown issued the injunction, siding with the U.S. Chamber of Commerce and a tax preparation company, arguing that the FTC lacks authority to enforce the ban. This injunction delays the ban’s intended start date of September 4, 2024, as the court evaluates the FTC’s authority.  

The court is expected to rule on the challenge by August 30, 2024, and a preliminary review suggests that the ban might be struck down. Despite this uncertainty, many physicians are optimistic about the ban going into effect in September. The American Medical Association (AMA) estimates that between 35 percent and 45 percent of physicians in the U.S. are currently bound by noncompete clauses, making this ruling particularly significant for the healthcare industry.  

To learn more about the FTC’s ruling, tune into Zotec Answers and explore a previous A to ZPAC blog post on the topic.