On September 5, 2025, the Federal Trade Commission (FTC) officially withdrew its notice of appeal in the litigation over the validity of its Non‑compete Clause Rule,¹ thereby abandoning its challenge to the District Court’s ruling invalidating that rule.

The FTC also acceded to the vacatur of the rule, meaning the agency acknowledged, formally and legally, that the District Court’s decision to invalidate the rule stands. ² Chairman Andrew Ferguson and Commissioner Melissa Holyoak, in statements accompanying the FTC’s decision, emphasized that the FTC lacked authority for a sweeping rule, but would still police illegal non-competes through enforcement. ³

The FTC’s 2024 Non-compete Rule sought to ban nearly all post-employment non-compete agreements, requiring employers to rescind existing clauses and notify workers, with only narrow exceptions (such as for the sale of a business). ⁴ The rule aimed to preempt state law, and invalidate millions of existing agreements by declaring them an “unfair method of competition” under Section 5 of the FTC Act. ⁵ However, the US District Court for the Northern District of Texas (Judge Ada E. Brown) held that the FTC lacked the authority to promulgate the rule, and deemed it arbitrary and capricious, issuing a nationwide vacatur and injunction in August 2024. ⁶ The FTC initially appealed that ruling and sought to have the appellate court endorse the rule’s validity.

With its appeal withdrawn, the FTC is shifting strategy away from...

Read Full Story: https://news.google.com/rss/articles/CBMirgFBVV95cUxOcmlSUDJxVldLTEFkb0dqYlRN...