Scholars discuss the economic impacts and legality of the FTC’s now-defunct ban on noncompetes.

A sweeping Biden-era rule banning non-compete agreements with workers promised to generate thousands of new businesses annually, increase worker wages, slash health care costs, and fuel innovation. It is now, however, effectively dead.

In 2024, a Texas federal court struck down the rule, concluding that the Federal Trade Commission (FTC) lacked authority to issue such a broad rule. In September 2025, following leadership changes at the FTC, the agency dropped its appeals of that decision, meaning that the rule never went into effect.

The rule would have made existing non-compete clauses, in employment contracts, unenforceable against most workers. Further, it banned all new non-compete clauses. The rule would also have required employers to inform their workers of their rights under the rule. The FTC included an exception for “senior executives” who both earned more than $151,164 annually and served in policy-making positions who had signed non-compete clauses before the rule came into effect.

The FTC reports that about 20 percent of American employees work under non-compete clauses. Several states have adopted restrictions on non-compete clauses, with four states banning them entirely. The FTC’s rule, however, was the first nationwide measure of its kind.

Industry groups and employers challenged the rule, arguing that the FTC lacked statutory authority to institute it and that...

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