By Greg Care

In my prior update on the litigation over the Federal Trade Commission’s (FTC) rule banning nearly all employment non-compete provisions nationwide, I discussed that the FTC signaled an intent to stop defending its non-compete rule. We are seeing more evidence of that, but the saga continues with some new developments.

On March 7, 2025, the FTC filed requests to pause, or “stay,” the appeal proceedings in the Fifth Circuit (Ryan LLC v. Federal Trade Commission, No. 24-10951) and the Eleventh Circuit (Properties of the Villages, Inc. v. Federal Trade Commission, No. 24-13102), where the FTC had—before the change in administrations—been defending the legality of the rule. This was notable given the simultaneous political and legal drama unfolding within the FTC that would shift the balance of votes amongst the Commissioners who lead the agency.

Shortly after my last update, the Fifth Circuit granted the FTC’s request for a stay, putting the appeal on hold for at least 120 days. On July 10, the FTC renewed its request and reported that, since the first stay of proceedings, “the Commission has undergone significant personnel changes, including the Senate confirmation and the swearing in of Commissioner Mark Meador. In light of these changes and the press of Commission business, some additional time is necessary to determine whether the Commission should reconsider its defense of the rule challenged in this case.” The Fifth Circuit granted the request to continue the stay until September 8, 2025.

Likewise, the FTC sought and obtained a stay in the Eleventh Circuit, which it has recently asked to be extended for the same reasons noted above. The Court has yet to rule on the extension.

The FTC’s reference to the Senate confirmation of Commissioner Mark Meador, which happened on April 10 by a 50-46 vote, is almost certainly a signal of the shifting votes on whether to formally abandon the defense of the non-compete rule. Commissioner Meador is expected to join the voting bloc that disfavors the rule. The composition of the rest of the Commission is a complicated issue.

The FTC is supposed to be a five-member agency with no more than three members from the same political party. With Commissioner Meador’s confirmation, the FTC has three Republican members. The other two positions are in limbo. In March, President Trump fired the two Democrat members, Alvaro Bedoya and Rebecca Kelly Slaughter. They both challenged their dismissals in court. While Commissioner Bedoya formally resigned in June, Commissioner Slaughter continued the fight. Last week, a trial court sided with her, because President Trump’s rationale for her dismissal was inconsistent with the statute creating the FTC and long-standing precedent limiting the reasons the President could use for removing a Commissioner. The trial court ordered that Commissioner Slaughter be allowed to continue her duties and could not be removed by the President except for “‘inefficiency, neglect of duty, or malfeasance in office’ pursuant to 15 U.S.C. § 41.” The government appealed immediately and, on July 21, sought an emergency stay of the trial court’s order. The appellate court (the D.C. Circuit) issued an administrative stay of the trial court’s order to give Commissioner Slaughter an opportunity to respond and for the appellate court to make a decision on whether to make the stay effective pending a final outcome of the appeal. Briefing on that issue should be completed by July 29.

The underlying legal debate about the President’s authority to remove heads of independent agencies is a contentious and dynamic one. Several other similar removals are being litigated and will likely affect how this dispute is resolved. For example, National Labor Relations Board Member Gwynne Wilcox won a trial court victory in a situation very similar to Commissioner Slaughter’s (and in the same court). The government appealed and sought a stay. The D.C. Circuit granted the stay, and the U.S. Supreme Court agreed. None of these decisions resolved the key issue on the merits of what authority the President has to remove independent agency leaders, but the “tea leaves” suggest that the appellate courts are open to expanding that authority.

In the meantime, the FTC non-compete rule continues to be of no effect. So, as always, the key remains to look to state and local law for protection from unnecessary and/or overbroad non-competes.

If you have questions regarding non-competes in your situation, please contact us today to see if we can assist with your particular circumstances.

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