On Tuesday, August 20, 2024, the U.S. District Court for the Northern District of Texas expanded its limited preliminary injunction against the Federal Trade Commission (FTC), enjoining the agency’s Final Rule banning non-compete agreements from taking effect nationwide. This comes ahead of Judge Ada Brown’s previously announced timeline in the Ryan case, which aimed to provide a decision by Friday, August 30, 2024.In her ruling, Judge Brown established that the ban exceeds the statutory authority granted to the FTC, finding the rule to be “arbitrary and capricious because it is unreasonably overbroad without a reasonable explanation” and that implementation of such would “cause irreparable harm,” making specific note that the agency failed to justify any reason for banning such agreements across the board “instead of targeting specific, harmful non-competes.” Judge Brown underscored that the FTC’s attempt to enforce a sweeping ban on non-compete agreements was an overreach of statutory mandate, with the agency improperly attempting to wield legislative power that Congress did not grant.This ruling follows recent Supreme Court decisions which have curtailed agency power, including the Court’s recent decision to overrule their landmark Chevron case, calling the previous doctrine of agency deference “fundamentally misguided” in its allowance of agency statutory interpretation, with Chief Justice John Roberts further remarking that it “allows agencies to change course even when Congress has given them no power to do so,” a sentiment echoed by Judge Brown, whose ruling further concludes that “the role of an administrative agency is to do as told by Congress,” and that contrary to the interpretation of agency officials, “the FTC lacks substantive rulemaking authority,” fully rejecting the notion that the agency has any quasi-legislative authority, with its rulemaking authority limited to “housekeeping” matters such as internal agency procedure.While the FTC may still appeal this ruling, it has announced no concrete plans to do so, with representatives merely stating that they are “seriously considering a potential appeal,” while also noting the ability of the agency to address non-competes “through case-by-case enforcement actions.” Regardless of whether the agency elects to proceed with an appeal or any such individual actions, the broad legality of non-compete agreements is secure for the foreseeable future.We will continue to keep you apprised of any developments in this and any related matters; however, we are pleased to announce that, at this time, no action is required by any employer, including the measures previously mandated by the FTC Final Rule to notify impacted employees as to the enforceability of their non-competition covenants.