FTC Backs Off Its Nationwide Non-Compete Ban — Here’s What You Should Do Now

TL;DR: No nationwide ban. Stronger state rules still apply, and the FTC is pivoting to case-by-case actions. (Yes, like switching from a sledgehammer to a set of precision screwdrivers 🪛.)

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Hey Bosses!

On September 5, 2025, the FTC said it will drop its appeals and “accede to vacatur” of its 2024 Non-Compete Clause Rule—the one that would’ve banned most employer non-compete agreements nationwide. Translation: the FTC is no longer trying to revive the rule, and the court decision setting it aside stands. The Commission’s vote was 3–1 (two statements supporting, one dissent). Federal Trade Commission

The FTC’s Chair and one Commissioner issued a statement confirming they’ve withdrawn the appeals and are shifting to case-by-case enforcement under existing antitrust laws, rather than a blanket rule.

At the same time, on September 4, 2025, the FTC opened a Request for Information (RFI) on employer non-competes—essentially asking the public to submit examples and evidence that could inform future enforcement actions. Comments are due November 3, 2025.

Also on September 4, the FTC announced a proposed consent order against Gateway Pet Memorial Services, requiring the company to stop enforcing its non-competes and releasing ~1,800 workers—an example of the FTC’s targeted enforcement approach going forward.

What this means 

• There is no federal, across-the-board ban on non-competes in effect. The 2024 rule remains vacated (set aside) by the courts, and the FTC has now stopped fighting that ruling.

• The FTC can still challenge specific non-compete practices it believes are anticompetitive (think: very broad, coercive, or used to stifle competition), and it is signaling it will do so.

• State law still controls day-to-day enforceability. States like California, Minnesota, North Dakota, Oklahoma, and D.C. have bans or heavy restrictions; many other states allow non-competes only for higher-paid workers or with strict limits. (This part hasn’t changed because the federal rule never took effect.)

Employer takeaways 

1. Do not “unban” everything. If you paused changes waiting on a federal rule, remember: state laws (and salary thresholds) still govern what you can do. Multi-state employers need state-specific templates.

2. Expect targeted FTC scrutiny. Sweeping or punitive non-competes—especially for rank-and-file roles—are likelier to draw attention. Plan for narrow tailoring and documented business justifications.

3. Watch the RFI window (now–Nov 3). The agency is gathering intel that could shape future enforcement; if non-competes are mission-critical in your industry, consider submitting a thoughtful comment.

4. Alternatives matter. Courts and regulators often look more favorably on confidentiality (NDAs), trade-secret safeguards, non-solicit, invention-assignment, and paid notice/garden-leave constructs—not one-year, coast-to-coast bans for hourly roles. (Still, check state constraints.)

5. TRAPs aren’t a loophole. Training-repayment agreements used to “mimic” a non-compete can also attract scrutiny if they’re punitive or pretextual. The FTC and state AGs have flagged these patterns before.

6. Document your “why.” If you use a non-compete, keep clear, role-specific rationale tied to trade secrets, customer goodwill, or high-level strategy, plus evidence you tried narrower tools first.

What to do this week (step-by-step)

1) Map your footprint.
List the states where you hire; categorize roles (exec, sales with goodwill, R&D with trade secrets, hourly/field, etc.). Flag which states have bans or pay thresholds that would bar or limit non-competes. (If you paused updates for the federal rule, resume your state-by-state refresh now.)

2) Tighten or replace broad non-competes.
For lower-level roles, default to:

• NDA + robust trade-secret protocol,

• Non-solicit (customers/employees) tailored to territory/accounts,

• Reasonable notice or garden leave for critical roles, and

• IP/invention assignments for creators/engineers.

3) Build your defensibility file.
For any remaining non-compete, maintain: (a) the legitimate interest you’re protecting, (b) why lesser measures won’t work, (c) reasonable geography/duration, and (d) compensation consideration (where required). This helps both in state court and if the FTC comes knocking.

4) Update onboarding + offboarding scripts.

• Use state-specific disclosures and wage thresholds.

• Train recruiters and managers to avoid blanket promises about enforceability.

• On exit, focus on return of data/devices and reminders about NDAs/trade secrets, not threats that overreach.

5) Decide whether to comment to the FTC (by Nov 3).

• If you face hiring bottlenecks due to competitors’ non-competes—or if you rely on narrow, defensible restrictions for trade-secret roles—consider submitting examples, data, and your proposed guardrails.

Be Audit-Secure™!