Noncompete agreements affect about one in five U.S. workers, blocking them from seeking a better job in the industry where they have experience. Despite the fact that millions of workers are currently being restrained by noncompetes, the Federal Trade Commission (FTC) announced recently that it was going to drop its appeals of two district court orders that prevent the agency from banning these agreements.
On the day before voluntarily dismissing these appeals, the FTC’s Joint Labor Task Force announced both a Request for Information on noncompetes and an enforcement action blocking a company from enforcing current agreements. The Commission insists it will continue case-by-case enforcement against uncompetitive noncompetes. This approach resets federal action to a slower case-by-case enforcement approach and aligns with broader attacks on the administrative state.
Back in 2024, the FTC projected that banning noncompete agreements would have raised earnings for the average worker by $524 annually and fostered growth in small businesses and startups. The final Noncompete Clause Rule was published on May 7th, 2024, and it would have banned noncompete agreements nationally as unfair methods of competition under Section 5 of the FTC Act. The ban would have been applied via two categories: for “workers other than executives,” the rule banned enforcement of existing and new agreements, while for executives, it blocked new agreements but grandfathered in existing ones. The ban...
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