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District Court Sets Aside FTC’s Rule Banning Non-Compete Agreements

From the Court's ruling: "For the reasons enumerated above, it is ORDERED that Ryan and Plaintiff-Intervenors’ Motions for Summary Judgment are GRANTED. (ECF Nos. 166, 168). Additionally, for the reasons the Court grants Plaintiffs’ Motions for Summary Judgment, the Court DENIES the FTC’s Motion for Summary Judgment. (ECF No. 184). The Non-Compete Rule, 16 C.F.R. § 910.1–.6, is hereby SET ASIDE and shall not be enforced or otherwise take effect on September 4, 2024, or thereafter."

The Development of the Texas Non-Compete; A Tortured History

Although Texas offers tax incentives and a favorable business climate, high tech businesses may have, in the past, understandably been reluctant to relocate to Texas because of the prior anemic protection granted to businesses in the arena of non-competes. These businesses, one assumes, have no interest in training their best and brightest today, only to have them become competitors tomorrow. The development of the non-compete covenant body of law in Texas, especially within the past five years, has addressed many concerns that businesses could have with the enforcement of non-competes. The dual prongs of Sheshunoff Management Services v. Johnson3 and Marsh USA v. Cook,4 addressed fully in this article, have provided some stability to the important business and legal issue of non-compete enforcement in the state of Texas.

FTC Final Rule Limiting Non-Compete Agreements: Considerations for M&A Transactions

On April 23, 2024, the Federal Trade Commission (“FTC”) published a final rule (the “Final Rule”) that would significantly curtail the use of employee non-competes throughout the United States and invalidate many existing agreements subject to a few exceptions. However, a federal judge in the Northern District of Texas struck down the Final Rule before it went into effect and there is continuing litigation. Regardless of the outcome, the strategies and concepts laid out here will remain relevant and still be useful alternatives when considering state law restrictions or deal dynamics that make non-competes less palatable.

FTC Rule Banning Employment-Based Non-Compete Agreements: Considerations for Employers

This short paper sets out what the FTC Rule provides for and summarizes the legal challenges to the Rule and the state of play in each case. It then sets forth a series of considerations that employers should consider, given the terms of the Rule and the state of the litigation.

Employment Non-Competes: State of Play

While 2022 featured many new state laws and court decisions concerning covenants not to compete in employment contracts, the state of non-competes in Texas saw no change. However, 2023 brought non-competes to the headlines nationally and created a lot of questions for business owners and employees regarding the continued enforceability of non-competes. As of the date of this article, non-competes are still enforceable in Texas. However, employers with employees in other states need to pay close attention to the state of play for non-competes in the state in which their employees reside. In addition, national assaults on non-competes have arisen from the proposed rule making by the Federal Trade Commission and the National Labor Relations Board. This article summarizes the factors to ensure anon-compete is enforceable in Texas and then discusses recent federal actions: the Federal Trade Commission proposed rule and the National Labor Relations Board memorandum.

Drafting the Bullet Proof Non-Compete

The basic principle of non-compete law is reasonableness, and that’s a pretty fuzzy concept. That means there will almost always be some argument that no matter how well the non-compete is drafted, it is unreasonable. Still, there are ways to draft a non-compete to maximize the chance that a court will enforce it later. So here are the key questions that come up when you’re drafting a typical Texas non-compete.

Non-Compete Drafting and Litigation

This paper provides a summary of current Texas law regarding: (1) the inevitable disclosure doctrine; (2) covenants not to compete; (3) non-recruitment covenants; (4) the fiduciary obligations of at-will employees; (5) protecting or obtaining trade secrets in state and federal court litigation; (6) misappropriation of trade secrets cases; and (7) the duty of preservation and spoliation issues in discovery.