Labor & Employment Developments Blog

The Federal Trade Commission’s (FTC) push to invalidate non-compete agreements for millions of workers gained steam today, courtesy of a ruling out of the Eastern District of Pennsylvania. As noted by this blog, in April of 2024 the FTC announced a final Rule largely invalidating non-compete agreements across the country. In the aftermath of that announcement multiple lawsuits were filed against the FTC, seeking to enjoin enforcement of this Rule. 

Earlier this month, opponents of the FTC’s Rule were offered a glimmer of hope when the U.S. District Court for the Northern District of Texas granted an injunction in Ryan LLC v. Federal Trade Commission. The relief provided by that Court, however, was limited, as the ruling only enjoined the FTC from enforcing the Rule against the specific plaintiff in that case. Following that ruling, attention turned to the U.S. District Court for the Eastern District of Pennsylvania, which was set to rule on an injunction request sought in ATS Tree Services, LLC v. Federal Trade Commission. Opponents to the FTC’s Rule hoped the Court there might provide broader relief.

In a decision handed down today, however, Judge Kelley Brisbon Hodge denied the plaintiff’s motion for an injunction. The Court found that ATS Tree Services failed to establish it would suffer irreparable harm were the rule to go into effect, a finding that by itself would warrant denying the requested injunction. The Court, however, went further, finding that even had the plaintiff established irreparable harm, its request would still be denied as it was unable to demonstrate that it was likely to prevail on its claim that the FTC’s Rule was unlawful.  Rather, the Court found that the FTC was likely acting within its authority when issuing the Rule. 

As of today, the FTC’s Rule is set to go into effect on September 4, 2024. There is still, of course, a long time between now and then. There have been other lawsuits filed challenging the legality of the FTC’s Rule, and other courts will have their chance to weigh in on this issue. This blog will be sure to keep you updated on any new developments, and if you have any questions please contact a member of our Labor and Employment team.