In the latest reversal of employee-friendly Biden-era policies, the Trump Administration’s Federal Trade Commission (“FTC”) moved this week to vacate its rule banning noncompete agreements.

As we have written previously, noncompete agreements are widely used by employers to limit workers’ ability to compete with their former employer during or after employment. These broad covenants, to which many workers must agree as a condition of employment, restrict their freedom to pursue better jobs elsewhere. Studies have shown that noncompetes suppress wages, hamper innovation, and block entrepreneurs from starting new businesses. Noncompete agreements compound the power imbalances employees already face in relationships with their employers, and they exist only to protect employers. An estimated 30 million workers—nearly one in five working Americans—are subject to a noncompete agreement.

The FTC Rule Banning Noncompetes

In January of 2023, the FTC announced a proposed rule which would ban noncompete agreements nationwide. The public submitted some 26,000 comments almost entirely in support of a noncompete ban, and the FTC announced its final rule in April of 2024. The FTC noncompete ban would have invalidated nearly all existing noncompetes and banned new ones except in rare circumstances. This would have permitted workers to freely pursue new employment opportunities without fear of being sued by their former employers, leading to increased wages—to encourage employees to...

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