Summary:
In 2024, the Federal Trade Commission (FTC) issued a sweeping final rule banning nearly all post‑employment non‑compete agreements nationwide, aimed at freeing up job mobility, boosting wages, and sparking innovation. The rule was published and scheduled to take effect on September 4, 2024.
However, before it could go into effect, multiple federal courts, including in Texas, Florida, and elsewhere, blocked the enforcement through injunctions—finding that the FTC lacked clear statutory authority and that the rule may be unconstitutional under the major‑questions doctrine.
By early 2025, with the FTC’s appeals stayed through mid‑July 2025 and the agency reportedly reevaluating its position under new leadership, the nationwide ban remained unenforceable.
In the meantime, state legislatures stepped into the void. States like Arizona moved to fully ban non‑competes, while others—such as New York, Illinois, and North Carolina—proposed income‑based thresholds limiting their use. Wyoming enacted SF 107, effective July 1, 2025, banning non‑competes except in narrowly defined cases for trade‑secret protection or higher‑level personnel.
The national picture in mid‑2025: four states fully ban non‑competes, 34 plus D.C. impose restrictions, and only a minority remain unregulated or loosely governed.
Why it matters:
- Poorly regulated non-competes are seen as suppressing wages, limiting worker mobility, and dampening innovation.
- The FTC’s dramatic—but currently suspended—ban opened the door for aggressive state-level reform.
- The outcome will reshape employer strategies and reshape power dynamics in the labor market.
Bullet Highlights
- FTC final rule banned most non-competes, effective September 4, 2024
- Courts blocked enforcement, citing FTC lacked authority and rule raised constitutional issues
- FTC appeal stayed until July 2025; enforcement remains halted
- States rapidly advancing reform—full bans (Arizona), income thresholds, and exceptions (Wyoming)
- By mid-2025, majority of U.S. states restrict non-competes; only handful remain hands-off
Outlet: Frost Brown Todd LLP – The Non-Compete Agreement Landscape in 2025 – Published February 3, 2025
Outlet: Seyfarth Shaw LLP – FTC Non-Compete Ban: What You Need to Know – Originally published June 11, 2024
