FTC Abandons Efforts to Ban Virtually All Employee Non-Competes

After a year-and-a-half of uncertainty, the Federal Trade Commission’s efforts to ban employers from enforcing most non-compete clauses against employees have come to an end. Last year, the FTC fought to issue such a prohibition, but after being blocked in the courts and a change in leadership after the 2024 presidential election, the FTC recently abandoned this effort.

In April 2024, the FTC under the Biden Administration issued its final “Non-Compete Clause Rule,” which would have banned most employment non-competes in the United States. If it had gone into effect, the rule would have impacted an estimated 30 million U.S. employees covered by a non-compete agreement.

The sweeping new FTC rule was set to take effect last September, but several lawsuits were filed to challenge it. In one of those cases, the U.S. District Court for the Northern District of Texas, in August 2024, blocked the rule from taking effect nationwide. A number of business groups, including the U.S. Chamber of Commerce, had argued (among other things) that the FTC had overstepped its authority by issuing a blanket ban on non-competes. The FTC appealed that court decision, as well as another ruling against the FTC’s non-compete rule in a separate case.  Those two appeals slowly worked their way through the courts.

But those appeals were filed by the FTC under the Biden Administration. Following the presidential election, the Trump Administration’s FTC leadership indicated it has different priorities and perspective. In September 2025, the FTC voted 3-1 to dismiss its appeals and abandon its non-compete rule. The legal result is that the FTC’s non-compete rule remains enjoined and may not be enforced.

While this skirmish may be over, that does not mean the end of federal efforts to limit non-compete agreements.  Current FTC Chairman Andrew N. Ferguson warned businesses in his statement about the non-compete rule that the FTC would continue enforcement actions against “unlawful non-compete agreements” in specific cases, and noted the recent filing of a complaint against a large business that allegedly sought to “curtail worker mobility and workers’ ability to negotiate better employment terms.”

For employers that routinely use non-compete agreements with their employees, the demise of the FTC rule will provide a measure of certainty. However, efforts to limit the use of non-compete agreements in employment likely will continue at both the federal and state level.