The FTC’s Noncompete Ban Is Dead — Here’s Where We Are Now ⚖️
For a year and a half, everyone was asking the same question: “Do we really have to live in a world where a federal agency just banned almost all noncompetes?”
As of fall 2025, the answer is: no. The FTC’s 2024 Non-Compete Clause Rule has been vacated and the agency has now formally walked away from the appeals, effectively killing the rule.
But that doesn’t mean noncompetes are “back to normal.” Instead of a single sweeping federal rule, we now have:
- an FTC that is openly hunting abusive noncompetes case-by-case, and
- a patchwork of state laws ranging from total bans (California, Minnesota) to new employer-friendly statutes (Florida’s CHOICE Act).
This is the new landscape employers and employees are actually living in.
What the FTC’s Noncompete Rule Was Supposed to Do 🛑
In April 2024, the FTC issued a final rule that would have banned almost all worker noncompete clauses nationwide, with narrow exceptions for sellers in a sale-of-business context. (Federal Trade Commission)
The rule:
- defined “noncompete clause” broadly as any term that functioned to prevent a worker from taking a competing job or starting a competing business;
- would have invalidated existing noncompetes for most workers; and
- imposed notice obligations on employers to tell workers those clauses were no longer enforceable.
The FTC justified the rule on competition grounds, pointing to roughly 30 million workers subject to noncompetes and arguing that eliminating them would increase wages and job mobility. (AP News)
From the agency’s perspective, this was going to be the federal reset: one simple national answer.
Courts did not see it that way.
How the Courts Killed the Rule ⚖️🪓
Two key cases did most of the damage.
| 🏛️ Case | 🧩 What the Court Did | 📌 Effect on the Rule |
|---|---|---|
| Ryan LLC v. FTC (N.D. Tex.) (Justia Law) | Held that the FTC lacked authority to issue a sweeping noncompete ban and vacated the final rule nationwide. | Rule could not take effect anywhere; enforcement was blocked across the board. |
| Properties of the Villages v. FTC (M.D. Fla.) (Justia Law) | Issued a preliminary injunction barring enforcement of the rule against that specific employer, relying on the “major questions” doctrine. | Reinforced the idea that a rule of this economic magnitude needed clear congressional authorization. |
Judge Ada Brown in Ryan called the rule “unreasonably overbroad” and concluded the FTC had overstepped its statutory authority. (Barron’s)
Between Ryan’s nationwide vacatur and Villages’ narrower injunction, the practical result by late 2024 was simple: the rule was frozen and would not take effect on September 4, 2024 as originally planned.
For a while, everyone waited to see what would happen on appeal.
September 2025: The FTC Walks Away 🚪
On September 5, 2025, the FTC filed papers to:
- dismiss its appeals in Ryan LLC v. FTC (Fifth Circuit) and Properties of the Villages v. FTC (Eleventh Circuit); and
- “accede to the vacatur” of the Non-Compete Clause Rule. (Federal Trade Commission)
In plain English: the agency and the Trump DOJ have officially stopped trying to resurrect the rule and have accepted that the district court’s vacatur stands. Reuters reported that the administration dropped its legal defense of the Biden-era rule entirely, aligning with new FTC leadership critical of such sweeping regulation. (Reuters)
At this point:
- there is no federal noncompete ban;
- the 2024 rule is effectively dead, not just “on hold”; and
- there will be no appellate ruling establishing broad FTC authority to enact something similar.
The regulatory baseline snaps back to where it was pre-rule: a mix of state law plus whatever the FTC can do without a blanket regulation.
What the FTC Is Doing Instead: Case-by-Case Enforcement 🎯
The agency didn’t just shrug and go home. On September 4, 2025—literally the day before it moved to accede to vacatur—FTC announced an enforcement action against Gateway Pet Memorial Services, the nation’s largest pet cremation business. (Federal Trade Commission)
The complaint alleged that Gateway:
- required nearly all new hires, including low-wage workers, to sign noncompetes, regardless of role; and
- used these clauses to suppress wages and limit worker mobility in violation of Section 5 of the FTC Act (unfair methods of competition). (Federal Trade Commission)
Under the final consent order, the company must:
- stop enforcing all existing noncompetes,
- stop imposing new noncompetes on workers, and
- provide notice to employees that their noncompetes are no longer in effect.
In other words, the FTC has pivoted to a Gateway-style playbook: pick a company with sweeping, arguably abusive noncompetes and bring a targeted Section 5 case.
Here’s the before/after in one view:
| 🕰️ Then (2024 Rule Strategy) | 🔍 Now (2025 Enforcement Strategy) |
|---|---|
| One national rule banning almost all worker noncompetes, with narrow sale-of-business exceptions. (Federal Trade Commission) | No rule; instead, case-by-case actions against companies with overbroad or coercive noncompetes, framed as unfair competition. (White & Case) |
| Heavy reliance on rulemaking authority and a broad reading of Section 6(g). | Heavy reliance on Section 5 enforcement and consent orders; no need to defend rulemaking authority in court. |
| Uniform nationwide standard if the rule survived. | No uniform federal standard; state law rules, with the FTC intervening only in the worst cases. (Husch Blackwell) |
For employers, the message is subtle but important: the FTC will not police every noncompete, but egregious patterns (e.g., near-universal noncompetes for low-level employees) are now squarely on its radar.
State Law Is Back in the Driver’s Seat 🗺️
With the federal rule gone, enforceability is once again mostly a state-law question. The map in 2025 looks more polarized than it did even a few years ago.
States with Broad Employment Noncompete Bans
A few states essentially ban employment noncompetes (outside sale-of-business scenarios):
| 🚫 State Ban | 📌 Scope |
|---|---|
| California | Longstanding statutory ban on employment noncompetes, recently reinforced with new anti-avoidance and anti-choice-of-law provisions. (Economic Innovation Group) |
| North Dakota | Bans noncompetes except in narrow sale-of-business contexts. (Paycor) |
| Oklahoma | Similar near-total ban outside sale-of-business and limited exceptions. |
| Minnesota | Banned employment noncompetes entered into on or after July 1, 2023, with exceptions for sale/dissolution of business. (Robins Kaplan) |
These are effectively “no noncompetes for employees, ever” jurisdictions, though they still allow NDAs, IP assignment, and customer non-solicitation in many circumstances.
States Tightening, Especially for Certain Workers
Several states have sharply limited noncompetes for:
- low-wage workers,
- specific industries like health care, or
- particular professions.
Examples include new or expanded restrictions in Louisiana, Maryland, and Pennsylvania (health-care workers), along with continuing reforms in states like Washington, Oregon, Illinois, and Massachusetts that emphasize income thresholds, notice requirements, and reasonableness standards. (Frost Brown Todd)
New York flirted with a near-total ban, only for the governor to veto the bill as too blunt, signaling a preference for more targeted reforms rather than a California-style approach. (AP News)
States Moving in the Opposite Direction: Florida’s CHOICE Act 🌴
Florida, meanwhile, has become the counter-example.
The state’s CHOICE Act, effective July 1, 2025, expands enforceability for certain noncompetes and garden leave arrangements. (Henderson Franklin)
Key features:
- longer permissible duration (up to four years in some circumstances);
- elimination of strict geographic limitations in favor of broader “legitimate business interest” analysis; and
- salary thresholds and definitions that carve out which employees are covered.
Commentary notes that CHOICE creates a presumption of enforceability for covered garden-leave and noncompete agreements and obligates courts to grant preliminary injunctions in some enforcement actions, making Florida one of the more employer-friendly jurisdictions for well-drafted covenants. (Nelson Mullins Riley & Scarborough LLP)
The Net Effect
Put together, the post-rule landscape looks like this:
| ⚖️ Category | 🌍 Examples | 🧭 Practical Reality |
|---|---|---|
| Total or near-total ban states | CA, ND, OK, MN (Robins Kaplan) | Employment noncompetes are largely off the table; employers rely on NDAs and non-solicits instead. |
| Strong restriction states | WA, OR, IL, MA; multiple states limiting noncompetes for low-wage or health-care workers (Frost Brown Todd) | Noncompetes are possible but heavily constrained by income thresholds, notice rules, and reasonableness. |
| Employer-friendly or expansion states | FL (CHOICE Act) (Henderson Franklin) | Well-structured noncompetes are still a powerful tool, especially for higher-paid workers and key roles. |
For multi-state employers, the compliance answer is painfully familiar: you don’t have “a noncompete policy,” you have a noncompete policy per jurisdiction and worker category.
What This Means for Employers 🧩
With the federal rule gone, the immediate question many employers ask is: “Can we just go back to our old noncompetes?”
The realistic answer is more nuanced.
First, state bans and restrictions are not going away—if anything, they are accelerating. Minnesota’s 2023 ban and various health-care carveouts are proof that state legislatures are perfectly willing to act without the FTC’s help. (Robins Kaplan)
Second, the FTC’s Gateway case signals a new enforcement risk even without a rule:
- near-universal noncompetes for rank-and-file employees,
- onerous restrictions unrelated to any plausible legitimate interest, and
- contractual structures that look like they’re primarily about intimidating low-wage workers
are now potential Section 5 unfair-competition cases, not just state-law reasonableness questions. (Federal Trade Commission)
Third, courts are more sensitive than ever to the “major questions” theme that ran through Ryan and Villages: sweeping interventions in core labor markets are supposed to be legislative, not regulatory. That doesn’t help employers if a state legislature decides to copy California or Minnesota; it just channels the fight to different forums. (Reuters)
For drafting and enforcement strategy, that suggests:
- focusing noncompetes on genuinely senior or strategically sensitive roles;
- tightening their scope (time, geography, and covered activities) to what you can credibly defend; and
- investing more heavily in confidentiality, trade-secret, IP assignment, and non-solicitation covenants that are more likely to survive in restrictive states.
What This Means for Workers 👥
Workers who thought the FTC had “solved” noncompetes are back in the more complicated, state-driven world.
Some broad truths still hold:
- In California, North Dakota, Oklahoma, and Minnesota, ordinary employment noncompetes are essentially off the table, but employers often substitute aggressive NDAs and non-solicitation covenants instead. (Robins Kaplan)
- In states like Florida, higher-paid employees will see more robust noncompetes and garden-leave arrangements under CHOICE, not fewer. (Henderson Franklin)
- Many states are quietly carving out protections for low-wage and health-care workers, even while leaving more discretion for higher-compensated employees. (Frost Brown Todd)
And the FTC’s pivot means that in extreme cases—like being forced to sign a noncompete for a low-level, non-sensitive role—there is now at least a theoretical possibility of federal enforcement layered on top of state-law defenses. (Federal Trade Commission)
But there is no universal federal safety net. Whether a particular clause is enforceable still depends heavily on where you live, what you do, and how your agreement is drafted.
The Bottom Line: No Federal Ban, More Patchwork, Higher Stakes 🧨
The story of the FTC’s noncompete rule ends not with a landmark Supreme Court opinion, but with a shrug: the agency and the new administration backed away from a legal fight they were likely to lose and chose a narrower enforcement path instead. (Federal Trade Commission)
Where we are now:
- The 2024 FTC noncompete rule is dead. Employers do not have to comply with its notice or voiding requirements. (Federal Trade Commission)
- State law is everything. Bans in CA/ND/OK/MN, targeted restrictions elsewhere, and employer-friendly developments like Florida’s CHOICE Act define the real playing field. (Robins Kaplan)
- The FTC is not out of the picture. Instead of a blanket rule, it will continue to bring high-profile Section 5 cases against employers with particularly abusive noncompete practices, as Gateway illustrates. (Federal Trade Commission)
For anyone drafting, enforcing, or challenging noncompetes, that means more nuance, not less: you have to watch state legislatures, read consent orders, and assume that “because we’ve always done it this way” is no longer a safe justification.