There is no federal law banning non-compete agreements. The Federal Trade Commission finalized a rule in 2024 that would have prohibited most non-competes nationwide, but a federal court struck it down before it took effect, and the FTC formally removed it from the Code of Federal Regulations on February 12, 2026.1Federal Trade Commission. Noncompete Federal non-compete law today is essentially a gap: enforceability is governed by the law of your state, with a few narrower federal theories operating around the edges and one bill pending in the Senate.
Why There Is No Federal Ban
In April 2024, the FTC voted to finalize a regulation under 16 CFR Part 910 that would have banned employers from using non-compete clauses with nearly all workers, with an effective date of September 4, 2024. Before that date arrived, plaintiffs led by Ryan LLC sued in the U.S. District Court for the Northern District of Texas, arguing the FTC lacked authority to issue the rule. The court agreed, granted summary judgment for the plaintiffs, and set the rule aside nationwide.2Justia. Ryan LLC v. Federal Trade Commission
The FTC initially appealed. On September 5, 2025, the Commission voted to dismiss its appeals in Ryan LLC and in a related case, Properties of the Villages v. FTC, and to accept the vacatur.3Federal Trade Commission. Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule A Federal Register notice a few months later removed the rule from the CFR. No employer was ever required to comply with it, and no worker was ever released from a non-compete by it.
The Bill in Congress
With the FTC rule dead, the only active federal vehicle for a nationwide ban is legislation. The Workforce Mobility Act of 2025 was introduced in the Senate on June 11, 2025, and referred to the Committee on Health, Education, Labor, and Pensions.4Congress.gov. S.2031 – 119th Congress (2025-2026): Workforce Mobility Act of 2025 The bill would make it illegal for any employer to enter into, enforce, or attempt to enforce a non-compete agreement with any worker, including independent contractors. Similar bills have been introduced in past sessions without reaching a vote, so passage is uncertain.
Federal Laws That Still Touch Non-Competes
Two federal frameworks apply to non-competes even without a dedicated ban. Neither replaces state law, and both are narrower than the vacated FTC rule.
The National Labor Relations Act
The NLRB General Counsel issued memos in 2023 and 2024 taking the position that overly broad non-compete clauses interfere with employees’ rights under Section 7 of the National Labor Relations Act, which protects workers’ ability to organize and act collectively to improve their conditions. An NLRB administrative law judge ruled in June 2024 that certain non-compete and non-solicitation provisions violated the NLRA.5National Labor Relations Board. General Counsel Abruzzo Issues Memo on Seeking Remedies for Non-Compete and Stay-or-Pay Provisions The theory has real limits. The NLRA covers employees but not independent contractors or managers, and NLRB enforcement priorities shift between administrations.
The Defend Trade Secrets Act
The Defend Trade Secrets Act gives employers a federal cause of action when someone misappropriates trade secrets tied to a product or service used in interstate commerce. Courts can order injunctions, award actual damages and unjust enrichment, and impose exemplary damages up to double the initial award for willful misappropriation.6Office of the Law Revision Counsel. 18 USC 1836 – Civil Proceedings The statute explicitly states that an injunction cannot prevent someone from taking a new job. Any condition on employment must rest on evidence of actual threatened misappropriation, not simply on what the person knows. The DTSA is a targeted tool for genuine secrets, not a substitute for a non-compete.
What Actually Governs Your Non-Compete
Because there is no federal ban, whether your non-compete is enforceable depends on the law of your state and the specific terms of your contract. The variation across states is significant. Four states ban non-competes outright, and roughly 34 additional states plus the District of Columbia impose meaningful restrictions, such as minimum income thresholds, maximum durations, or requirements that the employer provide additional consideration beyond continued employment.
In states that do enforce non-competes, courts generally apply a reasonableness test that weighs several factors:
- Legitimate business interest. The employer must show the restriction protects something real, like trade secrets, confidential client relationships, or specialized training the employer invested in heavily.
- Duration. Courts are skeptical of restrictions lasting more than one to two years. A five-year non-compete for a mid-level salesperson is almost certainly getting thrown out.
- Geographic scope. The restricted area must match the employer’s actual competitive footprint. A regional company restricting a former employee from working anywhere in the country is overreaching.
- Hardship on the worker. If enforcing the agreement would effectively prevent someone from earning a living in their profession, courts are more likely to narrow or void it.
Some states will “blue pencil” an overly broad non-compete by narrowing it to what is reasonable rather than throwing it out entirely. Others treat an unreasonable clause as void from the start. That distinction changes how aggressively employers draft these agreements, and it changes what you can expect if you challenge yours.
If You Are Bound by a Non-Compete Right Now
The practical takeaway is straightforward. No federal rule voids your agreement. Whether it can be enforced against you turns on your state’s law and your contract’s terms. The questions courts look at hardest are whether the restriction protects a legitimate business interest, whether the duration and geographic scope match that interest, and whether enforcement would shut you out of your career. Federal action may change this later, either through the Workforce Mobility Act or through continued NLRB activity, but for now the answer to any specific non-compete question lives in state law.