The FTC’s nationwide ban on most employee non-compete agreements is no longer moving forward, so enforceability has reverted to state law, but the FTC and antitrust enforcers are pivoting to aggressive, case‑by‑case attacks on “unfair” or anticompetitive non‑competes instead.
What the FTC actually did
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On 5 September 2025, the FTC agreed to vacate its April 2024 Non‑Compete Clause Rule and dismiss all pending appeals from court decisions that had already blocked the rule nationwide.
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Vacatur means the rule is treated as if it never took effect; it cannot be enforced and does not pre‑empt state law.
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FTC leadership publicly called the rule legally unviable, but at the same time promised “aggressive” enforcement of non‑competes using existing antitrust and Section 5 powers.
What governs non‑competes now
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With the rule gone, enforceability of non‑competes is again governed primarily by state statutes and common law, plus federal antitrust and FTC Act constraints.
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Some states (for example, California, Oklahoma, North Dakota, Minnesota, Washington and Wyoming) broadly prohibit most employee non‑competes.
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Many other states allow non‑competes only if they are narrowly tailored (legitimate business interest, reasonable duration and geography, and appropriate scope of restricted activity, often limited to higher‑wage workers).
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A few states such as Florida and Kansas have created presumptions of enforceability for certain non‑competes (for example, up to specified time limits), provided other statutory conditions are met.
Snapshot of state‑level approaches
| State example | General stance on employee non‑competes | Notes |
|---|---|---|
| California | Broadly banned for employees. | Very limited exceptions (e.g., sale of business). |
| Minnesota | Recently adopted broad restrictions/ban. | Part of trend toward limiting worker restraints. |
| Washington | Significant restrictions and income thresholds. | Targets lower‑wage worker non‑competes. |
| Florida | Statutory presumptions of reasonableness for certain durations. | Generally more employer‑friendly. |
| Kansas | Similar presumption of enforceability for covered agreements. | Still must meet other requirements. |
The FTC’s new enforcement strategy
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The FTC has shifted from rulemaking to targeted enforcement under Section 5 of the FTC Act against non‑competes it views as “unfair methods of competition.”
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The Commission has created a labor‑markets task force and issued its first post‑rule enforcement actions and consent orders against employers using broad non‑competes it said restricted worker mobility and harmed competition.
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New 2025 DOJ/FTC antitrust guidelines explicitly warn that non‑competes and other restraints on worker mobility may be prosecuted as antitrust violations when they harm labor‑market competition.
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The FTC has sent warning letters to large healthcare employers and staffing firms, urging them to review and narrow or discontinue non‑competes that are overbroad or unjustified, and has opened an inquiry to collect data on the prevalence and effects of post‑employment non‑competes.
Practical implications for enforceability going forward
For employers:
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You cannot rely on a blanket federal allowance; you must comply with the specific state law where the employee works, which may ban or heavily restrict non‑competes.
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Overbroad, low‑wage, or “routine” non‑competes present heightened risk of FTC scrutiny, particularly in concentrated industries such as healthcare and staffing.
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Safer approaches include using narrower tools (confidentiality, IP assignment, non‑solicitation of customers or employees) and limiting any non‑compete to senior or highly compensated staff, with tailored duration and scope.
For workers:
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The absence of the FTC rule does not mean you have “no rights”; in several states non‑competes are void or unenforceable for many employees, especially lower‑wage workers.
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Even in states that allow non‑competes, courts often refuse to enforce clauses that exceed what is reasonably necessary to protect legitimate business interests.
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The FTC is explicitly inviting complaints from workers and rival employers about non‑competes that impede mobility or hiring, which may result in investigations or negotiated relief.
Likely future direction
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A nationwide statutory ban now seems unlikely in the near term, but state‑level legislative activity is continuing, and more states may adopt bans or income‑threshold limits.
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The FTC and DOJ will continue to shape non‑compete law indirectly through enforcement actions, consent decrees, and guidance that define when restraints on worker mobility cross the line into “unfair” or anticompetitive conduct.
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Employers should expect a “patchwork plus enforcement” environment: differing state rules overlaid with federal antitrust risk, especially where non‑competes are imposed on broad classes of workers or used to suppress wages or lock in labor.
If you tell me the state whose law governs your agreements (for example, New York, Texas, California), I can outline the specific non‑compete limits that now apply there.
