Earlier this Fall, the Federal Trade Commission (the “Commission” or the “FTC”) officially ceded its fight to impose a nationwide ban on employee noncompete agreements (the “Noncompete Ban”).
Originally championed in May 2024 under the Biden administration, the Ban would have prohibited most employers from entering into or enforcing noncompete agreements against their employees, declaring them an “unfair method of competition” under Section 5 of the FTC Act.[1] The Ban was met with swift opposition, and in August 2024, the Northern District of Texas struck it down, finding the FTC lacked clear statutory authority.[2] The Commission appealed that ruling to multiple federal appellate courts[3] – but the fight is over.
The FTC, now operating under the Trump administration, “acceded to the vacatur,” meaning that it will no longer defend the Ban or pursue its appeals. In a joint statement, Chairman Andrew N. Ferguson and Commissioner Melissa Holyoak described the Ban’s illegality as “patently obvious,” citing the absence of clear congressional authorization and the Ban’s sweeping scope. Thus, as a practical matter, the Noncompete Ban is dead.
However, the Commission’s interest in noncompete restrictions is very much alive. Rather than pursuing sweeping rulemaking, the FTC is pivoting to targeted enforcement – evaluating noncompete agreements on a case-by-case basis, with a particular focus on industries where such restrictions may harm consumers or competition. The healthcare...
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