Earlier this summer a Texas federal court blocked a new Federal Trade Commission (FTC) ban that affected employers who utilize non-compete agreements. While the court blocked the FTC’s new rule banning noncompete agreements, as of July 3, 2024, it only applied to the plaintiffs in that particular lawsuit. See Ryan, LLC v. Federal Trade Commission, 3:2024-CV-00986 (N.D. Tex. 2024).

This led to the FTC’s plans to continue enforcing the new rule that was set to go into effect on September 4, 2024. However, just in the nick of time, on August 20, 2024, the Northern District of Texas issued a Memorandum Opinion and Order, which appears to set aside the FTC’s ban on non-competition agreements. It states that the FTC’s new rule “shall not be enforced or otherwise take effect on September 4, 2024, or thereafter.” This suggests that the FTC’s new rule will no longer just apply to the plaintiffs of the underlying dispute or case in controversy, but to any employer subject to the FTC’s new rule.

While the true effects of the Memorandum Opinion and Order (August 20, 2024) are yet to be seen, it is worth noting that, generally, an order and memorandum opinion from a district court is only binding for the case within that court. However, the court ordered that the FTC rule be set aside, which may mean the FTC cannot enforce the rule against any other employers. Depending on what impact this Memorandum Opinion and Order (August 20, 2024) produces, it could be the difference between a valid and an invalid contract for an estimated 30 million contracts.