Employers who have been following the legal challenges to the Federal Trade Commission’s (FTC) proposed non-compete ban may recall that on July 3rd, a federal court in Texas granted a motion for a preliminary injunction to stop the ban from going into effect (which applied to just the parties in that case).
Yesterday, a Pennsylvania federal court went the opposite way, denying a plaintiff company’s motion to preliminarily enjoin the ban from going into effect, finding that the company had not established that it would suffer irreparable harm if the requested injunctive relief was not issued. The company had alleged that it would be harmed by complying with the ban because doing so would cause it to incur “non-recoverable costs” (including notifying employees as required by the ban’s notice provision and being forced to modify its business strategy and training programs) and lose the “contractual benefits” of its existing non-compete agreements. The court found these alleged harms either insufficient or too speculative. The court also rejected the company’s arguments that it was likely to succeed on the merits of its claims because the FTC did not have the authority to issue the proposed ban.
The Pennsylvania court did not address the July 3rd decision by the federal court in Texas, which has indicated that it plans to issue a final decision on the merits of that case by August 30, 2024.
As of now, the FTC’s proposed ban is scheduled to go into effect by September 4, 2024. Stay tuned.