In April of last year, the Federal Trade Commission (FTC) voted to implement its final rule prohibiting non-compete agreements in the workplace. The rule, as a practical matter, eliminated the patchwork of non-compete statutes and common law adopted on a state-by-state basis. It also was designed to greatly reduce the use and enforceability of non-compete and non-solicitation agreements, except in the narrowest of circumstances.
Although set to take effect on September 4, 2024, the rule was challenged almost immediately, and by August 20, 2024, the fate of the rule appeared uncertain when a federal trial judge in Dallas entered an injunction.[1] A final judgment was entered in that case on September 4, 2024, and the FTC followed with an appeal to the Fifth Circuit Court of Appeals (Ryan, LLC v. FTC, No. 24-10951).
Earlier this month, however, the FTC voted 3-1 to withdraw its notice of appeal.[2] Chairman Andrew N. Ferguson (joined by Commissioner Melissa Holyoak) emphasized a shift to case-by-case enforcement under Section 5 of the FTC Act, while dissenting Commissioner Rebecca Slaughter argued the rule should be defended.
On September 8, 2025, the Fifth Circuit officially dismissed the FTC’s appeal.
With the Rule dead in the water, it is apparent no nationwide ban will be implemented by the FTC under this Administration. Employers are back to dealing with the existing patchwork of state...
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