Noncompete agreements have long been contentious. Many employers view them as critical safeguards to protecting intellectual property, customer lists, pricing structures and operational processes. Most individuals subject to noncompetes — along with numerous labor advocacy groups — disagree. They largely believe the agreements limit worker mobility, suppress wages and reduce bargaining power.
In April 2024, the long-running debate came to a head when the Federal Trade Commission (FTC) announced a final rule that would have banned the use of most noncompetes when it took effect. But that never happened, and now it won't. On September 5, 2025, the FTC announced that it was moving to dismiss its lingering appeals to two separate legal challenges to the final rule. Here's what employers should know about the noncompete ban that never was.
Had the final rule gone into effect, it would have required employers to notify affected employees that existing noncompetes would no longer be enforced as of the rule's effective date. At that time, employers would also have been prohibited from entering into new agreements.
There was, however, a notable exception. Existing noncompetes for "senior executives" would have remained in force. The final rule defined these as employees who earn more than $151,164 a year and are in "policy-making positions." This generally would have included:
The FTC had expected the effective date to be September 4, 2024, but the ban was delayed because of immediate legal challenges. Most observers didn't expect the final rule to survive under a new presidential administration. Sure enough, as mentioned, the current FTC filed motions in federal court to dismiss its appeals in September 2025, allowing earlier rulings that vacated the rule to stand.
When the agency announced it was dropping its appeals, FTC Chairman Andrew Ferguson called the final rule "patently illegal" and said it "would never survive judicial review." However, Ferguson was quick to add that the agency's decision to drop its appeals doesn't mean it's given up on challenging allegedly unlawful noncompetes. He warned that "firms in industries plagued by thickets of noncompete agreements will receive warning letters from me," and he urged them to consider abandoning those agreements to minimize the risk of an FTC investigation and enforcement actions.
If your organization has used noncompetes in the past and plans to continue doing so, beware of compliance challenges. Here are some suggested steps to follow:
Although the FTC's broad noncompete ban is off the table, scrutiny of these agreements remains very much in play. Take time to review your policies regarding noncompetes, reduce legal exposure, and foster employee loyalty through sound management and employment practices. Our team can help you identify strategies for structuring compensation, benefits and other perks to help attract and retain valued employees.