FTC’s Non-Compete Ban Blocked; Oregon and Washington Employers Should Still Exercise Caution

By Attorney Bruce T. Garrett

Earlier this week, a federal judge in Texas issued a nationwide injunction blocking the Federal Trade Commission’s (FTC) rule that sought to largely ban non-compete agreements with employees. We first wrote about the FTC’s rule in April, which was set to become effective September 4, 2024. The judge ruled that the FTC exceeded its statutory authority in issuing the ban. Although the FTC is expected to appeal, the future of the ban is now uncertain and may not survive in the courts.

While the injunction may be welcome news for employers, those operating in Oregon and Washington should still proceed with caution when drafting non-compete agreements. Both states significantly limit the scope of these agreements and impose strict technical requirements, including salary thresholds, pre and post-employment notice, and temporal limitations, to name a few. Given this legal landscape, employers must remain vigilant to ensure their non-compete agreements comply with state-specific laws. Failure to adhere to these laws could render such agreements unenforceable, leaving employers without the protections they seek. In Washington, an employer may even be subject to a penalty for attempting to enforce a non-compete agreement that does not comply with the law.

In addition to the technical provisions under Oregon and Washington law, courts will continue to review non-compete agreements to determine if they are reasonable in geographic scope and whether the provisions are overly restrictive or broader than necessary to protect the employer’s legitimate business interests.

Given the complexities and dynamic nature of non-compete laws, employers should consult with legal counsel to ensure their non-compete agreements are legally sound and tailored to their specific business needs. Dunn Carney’s Employment Team stands ready to assist with any questions you have about non-compete agreements, or any employment-related legal issues.

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