On September 5, 2025, the Federal Trade Commission (FTC) announced it would dismiss its appeal of a 2024 court ruling that had determined that the FTC’s attempt at creating a federal noncompete ban had exceeded the FTC’s authority. Ending the legal defense of the noncompete ban effectively ends any chance of the ban going into effect.
This saga began on April 23, 2024, when the FTC issued a rule banning many noncompete clauses in employee contracts, which was quickly challenged when several parties filed lawsuits against the rule. On July 3, 2024, a Texas Federal Court issued a preliminary injunction against the noncompete ban, preventing the rule from taking effect on September 4. On July 23, 2024, a higher Federal Court reversed the preliminary injunction that had temporarily blocked the FTC from enforcing the rule. In August of that year, U.S. District Judge Ada Brown in Texas enjoined the rule nationwide, stating that the FTC exceeded its statutory authority and acted in an "arbitrary and capricious" manner. In July of 2025, the FTC was given a sixty-day deadline to decide if it wanted to abandon its defense of the noncompete ban. This most recent FTC announcement closes the case, with the Trump administration’s FTC not willing to defend a Biden-era ban on noncompete agreements. This announcement comes one day after the current FTC federal trade commission issued a request for information on employee noncompete agreements. Although this ends the immediate possibility of a federal ban, many states have enacted bans, and more have recently considered them.
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