Page 19 - Fall 2024 EDM Today

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Rule was to become effective, a Federal District Court
The FTC’s published FACT SHEET noted the Agency’s
rationale for the Proposed Rule, including its position that
Judge in Texas issued a nationwide injunction, setting
the clauses may be overused and have negative conse-
aside the FTC’s ban on non-competes. The Judge found
quences for the economy and employees and suggesting
the Rule “unreasonably overbroad” and suggested that
that other methods exist by which employers can protect
only Congress, not an administrative agency, (i.e., the
FTC), had the authority to enact such a substantive ban.
their “investments in training and capital.” Perhaps not
unexpectedly, employers pushed back.
occur. EDM Today reached out to Mr. Kubiak for some
Craig Kubiak and Laurie Meyer, partners with the Labor
follow-up questions about non-compete clauses generally
and Employment group at Amundsen Davis, LLC, recently The September 2024 enactment of the Rule did not
and the impact of these recent Federal court rulings:
outlined what happened next.
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Q: Does the Texas ruling close the discussion on
Per Kubiak and Meyer, the
this issue for good? If not, what might we expect in
Proposed Rule published in
the future?
April 2024 was to be made
effective on September 9,
A: The Temporary Injunction does not end the case,
2024. Shortly after the Pro-
but the Texas court clearly telegraphed that it would
invalidate the Rule. The FTC will have a diffi cult time
posed Rule was published,
bringing back a blanket ban under these circumstances.
and during the time period
when the public had a chance
to comment on the proposal,
Q: The FTC suggested that there are other ways in which
several employers fi led suit Expect more state action.
an employer might protect themselves. Do you have any
in Federal courts across the
EDM Today Magazine
EDM Today Magazine EDM Today Magazine (Continued on next page)
insight into other methods the FTC was referencing?
country, trying to stop or delay
its implementation. The suits
A: There are other types of contracts that would not have
challenged the authority of the
Craig Kubiak, Partner
been impacted, such as non-disclosure and non-solicita-
FTC to make such changes.
Amundsen Davis LLC.
tion provisions (prohibiting soliciting both customers and
The outcome of those cases
varied, but in August 2024, less than a month before the
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EDM Today, Fall 2024 Issue