On Aug. 20, U.S. District Judge Ada Brown struck down the FTC's ban on noncompete agreements, calling it "unreasonably overboard without a reasonable explanation." The rule was scheduled to take effect Sept. 4.
On Oct. 18, the FTC appealed the Texas federal court's decision. While the FTC still has the ability to address noncompetes through case-by-case enforcement actions, the incoming administration of President-elect Donald Trump could result in a different, more business-friendly regulatory environment than that of President Joe Biden.
Here are six other things to know about the uncertain future of the noncompete ban:
1. The FTC's authority to identify and pursue anti-competitive activity remains "unchallenged and intact," wrote attorneys from Jackson Lewis, an employment and labor-focused law firm, in an Oct. 14 blog post. The authors wrote that under Section 5 of the Federal Trade Commission Act, noncompete agreements can be characterized as "unfair methods of competition" and therefore enforceable by the FTC.
2. The FTC and the Department of Justice are also able to prosecute noncompetes deemed unlawful under the Sherman Antitrust Act, according to the blog post. Government agencies have used this act to pursue employers who have entered "no-poach" or wage-fixing agreements with one another.
3. Illinois, Iowa, Louisiana, Pennsylvania and Rhode Island have passed bills to ban noncompete agreements. Bills to ban noncompetes have been introduced in Arizona, Georgia, Kentucky, Missouri, New York, Rhode Island and Tennessee. Colorado, Mississippi and Nebraska introduced noncompete bans that failed.
4. Under Mr. Trump, it is unlikely that the FTC will maintain the same positions undertaken by Mr. Biden. According to Bloomberg Law, the FTC's attempts to ban noncompetes are "in doubt."
5. It is likely that Mr. Trump will also appoint a new FTC chair after he takes office. The current FTC chair, Lina Khan, worked closely with Mr. Biden's anti-trust agenda over his time in office. Assuming Ms. Khan steps down, as expected, the commission will then be headed by two Democratic and two Republican commissioners until a fifth member is confirmed, according to Quartz.
6. Possible candidates for the fifth committee member include: Gail Slater, an aide to Vice President-elect JD Vance and former executive of Roku and Fox Corp.; Mark Meador, a partner at antitrust law firm Kressin Meador and former FTC and Justice Department antitrust official; Todd Zywicki, a professor of law at George Mason University and Alex Okuliar, a partner at Morrison Foerster who helped lead the antitrust inquiry into Google under the former Trump administration, according to Quartz.