After months of speculation, the Federal Trade Commission has officially dropped its appeals in the two cases that struck down its nationwide noncompete ban. In a 3-1 vote earlier this month, the agency decided to walk away from the fight, leaving in place court rulings that vacated the rule. This wasn’t a quick or easy call: the FTC spent more than six months weighing its options after the change in presidential administrations earlier this year. The decision marks a dramatic shift in tone and strategy for the agency.
The now-abandoned rule, finalized in April 2024, would have banned nearly all post-employment noncompete agreements across the country. It also would have required employers to notify workers that their existing noncompetes were unenforceable, with only narrow exceptions for senior executives and business sales. At the time, the FTC estimated that roughly 30 million workers—about one in five—were bound by noncompetes. The rule was touted as a sweeping reform aimed at boosting worker mobility and wages.
Legal challenges came fast and hit hard. In August 2024, a Texas federal court struck down the FTC’s noncompete ban nationwide, finding that the agency lacked statutory authority and acted arbitrarily. A Florida court issued a narrower injunction soon after. The FTC initially appealed both decisions, but the agency’s posture changed following the administration shift. After requesting multiple stays to “reconsider its position,” the FTC ultimately concluded that continuing the appeals wasn’t the right move. (For more on the appeals, see our article here.)
That doesn’t mean the FTC is done with noncompetes. Far from it. The agency has made clear that it still plans to use its adjudicatory powers to target what it calls “onerous” or “unfair” noncompete agreements on a case-by-case basis, particularly in sectors like healthcare and staffing. Recent enforcement actions and warning letters underscore that message. The era of a blanket ban may be over, but employers should expect continued scrutiny—and a more surgical approach—from the FTC going forward.
Our Firm’s Employment Law group stands ready to advise employers who want to enforce their existing noncompete agreements or implement new agreements in light of this evolving legal landscape. If you have questions about compliance or strategy, we’re here to help.
