Game over or game on? The future of noncompetes

By: Tom Shumate, Managing Member - Meridian Law

In a recent article published in the Tennessee Bar Journal, Tom Shumate examines the 3-2 Federal Trade Commission decision which narrowly approved the issuance of a revised final rule (“Rule”) that prohibits most post-employment noncompete agreements nationwide. While this action was immediately met with cheers by most employees and jeers by most employers, Tom discusses how its immediate, short-term impact may be overstated.

Read the article in its entirety in the Tennessee Bar Journal.

DECISION UPDATE: On July 3, 2024, the United States District Court for the Northern District of Texas in Ryan, LLC, et al. v. Federal Trade Commission, issued a Memorandum Opinion and Order that granted the Plaintiffs’ and Plaintiff-Intervenors’ Motions for Stay of Effective Date and Preliminary Injunction regarding the enactment of the FTC Rule, but only with respect to those parties.[1] The Court did not enter a nationwide injunction regarding the FTC’s Rule as employers hoped.  However, the court indicated that it intends to enter a “merits disposition” by August 30, 2024, so it is possible that it could expand the relief provided.[2] Until then, the Eastern District of Pennsylvania is still expected to issue its ruling in July. The takeaway is that the FTC Rule is still set to take effect on September 4, 2024, but it is looking more likely that its enforcement will be enjoined before then.

[1] https://www.scribd.com/document/747853692/Us-Dis-Txnd-3-24cv986-d54536580e10323-Memorandum-Opinion-and-Order?secret_password=3O5uOJ26BlqD24YgGhsa

[2] Id.

If you or your company have questions regarding the Rule or its impact on your noncompete agreements, contact Tom Shumate at tom.shumate@meridian.law or 615.229.7499.