The FTC’s rule banning most covenants not to compete (widely known as noncompetes) nationwide is likely dead.
Noncompetes are agreements between employees and employers in which the employee promises not to “compete” with the employer—e.g., take a job with a competitor or start a competing business—for a specific period of time or within a particular geographic area should the employment relationship terminate.
The FTC rule banning noncompetes is unlikely to survive for two reasons.
First, Republicans will soon hold a majority of the five-member FTC and will likely withdraw the pending appeals discussed below, effectively killing the rule, a version of which the FTC first unveiled for public comment in January 2023 and which it finalized in April 2024. Commissioner Andrew N. Ferguson has been named the new FTC chair, Commissioner Melissa Holyoak will continue as commissioner and, subject to Senate confirmation, Mark Meador, currently in private practice at Kressin Meador Powers, will become a commissioner. Commissioners Ferguson, Holyoak and Meador will form a Republican majority. The precise timing of the change in control is unclear, as FTC Chair Lina Khan is not required to step down until the Senate confirms Ferguson as her replacement.
Second, in any event, the FTC is likely to lose both appeals of rulings enjoining enforcement of the rule.
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