FTC Abandons Federal Non-Compete Ban

The U.S. Federal Trade Commission (FTC) has terminated its efforts to enforce the Non-Compete Clause Rule (the “Non-Compete Rule”) it finalized in 2024. On September 5, 2025, the FTC issued a press release in which it stated that it would no longer be pursuing its appeal in the case of Ryan, LLC v. FTC, having voted to abandon the appeal 3-1 along party lines.

FTC Votes to Dismiss Appeal and Vacate Non-Compete Rule
The FTC filed its appeal in Ryan, LLC v. FTC after the district court found that the Commission had likely exceeded its authority in adopting the Non-Compete Rule. Based on this finding, the district court prohibited the FTC from enforcing the Rule, pending appeal. While the FTC appealed in the waning months of the Biden administration, it sought multiple delays following President Trump’s second inauguration. The FTC subsequently withdrew its notice of appeal on September 5 on the grounds that “[t]he Rule’s illegality was patently obvious.”

In addition to voting to abandon its appeal in Ryan, LLC v. FTC, the FTC also voted to “accede to the vacatur” of the Non-Compete Rule itself. As a result, the FTC’s ban on non-compete provisions has now come and gone.

FTC Files Complaint Seeking to Invalidate Employee Non-Compete Provisions
Notably, however, the day before the FTC announced its efforts to dismantle its Non-Compete Rule, it announced that it had filed a complaint against a pet cremation company and its affiliates seeking to invalidate all of the company’s employee non-competes. The complaint is based on federal antitrust law, and the FTC’s announcement quotes the Director of the FTC’s Bureau of Competition as stating, “We will protect workers by enforcing the laws against anticompetitive noncompetes.”

The announcement also states that, “[t]he Trump-Vance FTC has prioritized investigating and prosecuting deceptive, unfair, and anticompetitive labor-market practices”—further signaling that this is not intended to be an isolated enforcement action. As a result, while the FTC may have abandoned its Biden-era Non-Compete Rule, employers must still address the risk of facing FTC scrutiny related to their employee non-compete provisions going forward.

Key Takeaways for Employers
● While the FTC has abandoned its ban on employee non-competes, state laws still restrict their enforcement, and bans still exist in a handful of states, including California.
● Even though the FTC has abandoned its Biden-era Non-Compete Rule, it is still scrutinizing employee non-compete restrictions under federal antitrust laws.
● Even in states where non-compete provisions may be permissible, employers should be aware of restrictions on their enforcement. Employers should also consider cross-border statutory restrictions on enforceability—such as California’s ban on enforcing employee non-compete “regardless of where and when the contract was signed.”

If you have questions about your company’s use of non-compete provisions, please contact any of our attorneys.