26 Mar Current Legal Status of the FTC’s Ban on Non-Compete Agreements

As of March 26, 2025, the Federal Trade Commission’s (FTC) proposed ban on non-compete agreements remains unenforceable due to legal challenges. Initially slated to take effect on September 4, 2024, the rule faced opposition from various business groups, leading to multiple lawsuits. On August 20, 2024, Judge Ada Brown of the U.S. District Court for the Northern District of Texas ruled that the FTC exceeded its statutory authority in issuing the ban, rendering the rule unlawful and blocking its enforcement nationwide.

In response, the FTC filed an appeal on October 18, 2024, to challenge the court’s decision. The appeal is currently pending, and the rule’s future remains uncertain. In the interim, the FTC has indicated that it may pursue case-by-case enforcement actions against specific non-compete agreements deemed unfair or anticompetitive.

Political Developments
Additionally, recent political developments may influence the FTC’s stance on non-compete agreements. In January, 2025, President-elect Donald Trump appointed Andrew Ferguson, a Republican commissioner known for his opposition to broad regulatory measures, as the new FTC chair. This leadership change could impact the agency’s approach to non-compete regulations and enforcement strategies.

Employers and employees are advised to monitor these developments closely, as the legal landscape surrounding non-compete agreements continues to evolve.

Recommendations for PEOs:

• Review Contracts: Examine existing agreements with clients, employees, and co-employed workers to identify and assess the enforceability of non-compete clauses.en.wikipedia.org+8ftc.gov+8en.wikipedia.org+8
• Strengthen Other Protections: Enhance confidentiality, non-solicitation, and intellectual property agreements to protect business interests without relying on non-compete clauses.reuters.com+1reuters.com+1
• Stay Informed: Keep abreast of legal proceedings related to the FTC’s rule to ensure compliance and adapt business practices accordingly.

By proactively addressing these areas, PEOs can mitigate potential risks associated with changes in non-compete enforceability and maintain operational stability.