The FTC’s Non-Compete Ban: Bold Promise, Legal Gridlock

 

Back in early 2024, the Federal Trade Commission (FTC) made waves by announcing a sweeping ban on most non-compete agreements. Employers braced for impact. Employees celebrated newfound mobility. The final rule was set to take effect September 4, 2024.

And then—nothing.

 

Here’s a breakdown of how a bold regulatory move became mired in legal and political quicksand before it could take its first legal breath.

 

The Rule That Wasn’t

 

The FTC’s final rule, published May 7, 2024, was designed to prohibit nearly all non-compete clauses in employment contracts. It would have made most existing non-competes unenforceable and banned new ones outright. The move was billed as a major step toward increasing competition, boosting wages, and empowering workers to change jobs without fear of legal reprisal.

But legal opposition was swift and strategic.

Legal Blitzkrieg

 

Several lawsuits were filed almost immediately—by Ryan LLC, the U.S. Chamber of Commerce, a Florida-based employer (The Villages), and a Pennsylvania tree service company. These suits didn’t just question the wisdom of the rule; they challenged the FTC’s authority to issue such a sweeping regulation in the first place.

Over the summer of 2024, the courts responded. And not favorably.

• Texas federal court   granted a stay for Ryan LLC in July.
• A Pennsylvania court   refused a similar stay request for another employer—an early sign that outcomes would vary by jurisdiction.
• By August , a federal judge in Texas issued a   nationwide injunction , concluding that the FTC had overstepped its statutory authority.

Just like that, the rule was on ice.

 

Appeals, and Then... a Pause

 

The FTC appealed the Texas ruling to the Fifth Circuit Court of Appeals. But then, in a twist no one quite expected, the agency hit the brakes. Under newly appointed FTC Chair Andrew Ferguson, the agency asked the court to pause the appeal while it reconsidered its position. The court agreed to a 120-day stay, giving the FTC until   July 2025   to decide whether it would continue defending the rule.

That pause may prove terminal. Ferguson has publicly expressed skepticism about the rule's legal footing. If the agency walks away from the fight in July, the ban will effectively be dead—at least for the foreseeable future.

 

So... Are Non-Competes Still Legal?

 

Yes. For now, non-compete agreements remain valid and enforceable—subject to existing   state laws , which vary widely. Some states, like California, already ban them. Others, like Texas and Florida, continue to enforce them under certain conditions.

The FTC’s rule was meant to be a national standard. But with enforcement blocked and litigation on hold, the legal status quo remains.

 

What’s Next?

 

Unless the FTC revives its appeal by the July 2025 deadline, the non-compete ban will remain permanently stalled. If the agency does pursue the case, it will face a tough climb in the conservative Fifth Circuit, and potentially a Supreme Court that's shown interest in reining in the power of federal agencies.

In short: the clock is ticking, but the odds of resurrection appear slim.

 

The Takeaway

 

The FTC’s proposed non-compete ban was ambitious, headline-grabbing—and for now, entirely theoretical. Legal resistance and a leadership change have sidelined what would have been one of the most significant federal labor regulations in decades.

For employers, this is a reprieve. For employees hoping to job-hop without looking over their shoulders, the wait continues.

The rule may not be dead. But it’s certainly in a coma.