The FTC non-compete ban is not in effect and will not go into effect. A Texas federal court threw out the Federal Trade Commission’s 2024 rule before it could take effect, and in September 2025 the commission itself dropped its appeal and formally agreed to the vacatur. Whether your non-compete is enforceable now depends on the law of the state where you work, not on any federal rule.
What the FTC Rule Would Have Done
In April 2024, the FTC finalized 16 C.F.R. Part 910, a regulation that would have banned most non-compete agreements nationwide. It reached beyond contracts that explicitly forbid working for a competitor, sweeping in any contract term that effectively penalized a worker for taking a new job or starting a business.
The rule defined “worker” broadly enough to cover employees, independent contractors, and even unpaid volunteers.1Federal Trade Commission. FTC Announces Rule Banning Noncompetes Existing agreements with “senior executives” would have remained enforceable; the rule defined that term as someone in a policy-making position earning more than $151,164 per year.2Government Publishing Office. 16 CFR 910.2 – Unfair Methods of Competition For everyone else, employers would have had to send written notice that existing non-competes were no longer enforceable.
The rule kept one significant exception: non-competes tied to a bona fide sale of a business, an ownership interest, or substantially all of a business’s operating assets.3eCFR. 16 CFR 910.3 – Exceptions That carve-out mirrors what state law generally allows, and it still applies today under state law even without any federal rule.
Why the Rule Is No Longer in Play
The rule was challenged almost immediately. In Ryan LLC v. FTC, a federal judge in the Northern District of Texas found that the FTC lacked statutory authority to issue a blanket substantive rule banning non-competes and that the rule was arbitrary and capricious. Rather than issuing a limited injunction, the court set the entire rule aside, blocking it from taking effect on its scheduled September 4, 2024, start date.4Justia. Ryan LLC v. Federal Trade Commission
The final blow came from the FTC itself. On September 5, 2025, the commission moved to dismiss its appeals in both the Fifth Circuit (Ryan LLC) and the Eleventh Circuit (Properties of the Villages) and formally acceded to the vacatur. The current FTC chairman and another commissioner had dissented from the original rule, arguing the agency lacked authority to issue it. Once in leadership, they let the court’s decision stand.5Federal Trade Commission. Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule
16 C.F.R. Part 910 is vacated. No employer is bound by it. No worker can rely on it. There is no pending federal appeal that might revive it.
The FTC Still Pursues Individual Cases
Dropping the rule does not mean the commission has stopped scrutinizing non-competes. It continues to bring individual enforcement actions when it considers specific agreements anticompetitive. In February 2026, the FTC ordered a building services contractor, Adamas Amenity Services, to stop enforcing no-hire agreements. In November 2025, it finalized a consent order requiring a pet cremation company to stop enforcing non-competes against its workers.6Federal Trade Commission. Noncompete
A Joint Labor Task Force launched in early 2025 is investigating wage-fixing, no-poach, and no-hire agreements. The Department of Justice has gone further: in 2025, a jury convicted a staffing agency executive of conspiring to suppress nurse wages, resulting in a 40-month prison sentence and $550,000 in criminal fines. Agreements between competing employers to restrict worker movement are treated as potential antitrust violations, not routine contract disputes.
For an individual worker with an ordinary non-compete, though, federal enforcement is not the practical question. State law is.
State Law Now Decides Everything
With the federal rule gone, state law is the entire playing field, and the map is uneven. Four states currently ban non-competes outright, and more than 30 other states plus the District of Columbia impose meaningful restrictions.
Even the states with full bans generally allow non-competes tied to the sale of a business. Newer bans usually apply only to agreements signed after the law’s effective date, so older non-competes may still bind workers who signed them before the prohibition took effect. At least one state with a longstanding ban added a requirement in 2023 that employers proactively notify current and former employees that any non-compete clauses in their contracts are void.
Many states that stop short of a full ban use salary thresholds. Below a certain income, a non-compete is automatically void no matter what it says. Thresholds vary widely and are often adjusted annually. In 2026 they run from under $40,000 at the low end to over $160,000 at the high end. Some states set separate, lower thresholds for non-solicitation agreements. Others require employers to disclose non-compete terms in writing before the worker accepts the job, not after they start.
The variation is dramatic enough that an agreement fully enforceable in one state may be void in the neighboring state. Anyone subject to a non-compete should check the law of the state where they actually work, not where the employer is headquartered or where the contract was signed.
What Courts Do With Overbroad Agreements
Employers routinely draft non-competes broader than a court would enforce. What happens then depends on which approach the state follows.
- Red pencil. The court strikes down the entire agreement. If any part of the restriction is overbroad, the employer gets nothing. Only a handful of states follow this approach.
- Blue pencil. The court crosses out the unenforceable language and enforces whatever remains, provided the surviving text makes sense on its own. The court will not add new terms or rewrite existing ones.
- Reformation. The court rewrites the agreement to make it reasonable and enforces the modified version. This is the most common approach, used by a majority of states.
Reformation favors employers. A company can draft an aggressive non-compete knowing a court will trim it rather than throw it out. Some states have pushed back by making reformation discretionary, letting judges void agreements when the overreach is severe enough that fixing them would essentially create a contract the parties never agreed to. If you are weighing whether to challenge a non-compete, the approach your state follows matters a great deal.
Whether the Agreement Has Valid Consideration
A contract isn’t binding without something of value exchanged on both sides. For a non-compete signed at the start of employment, the job itself counts as consideration, and courts universally accept that. The harder question is what happens when an employer hands a worker a non-compete months or years into the job.
States split on this. A majority say continued employment alone is enough: because an at-will employer could fire you at any time, agreeing not to do so in exchange for the non-compete counts as consideration. A significant minority disagree and require something extra, such as a raise, bonus, promotion, stock options, or specialized training.
A few states go further. At least one requires employers to provide either a “garden leave” payment during the restricted period or some other mutually agreed-upon consideration specified in the agreement itself. Garden leave means the employer pays you a percentage of your salary during the non-compete period after you leave, giving you income while you’re locked out of competing work. Where required, the payment floor is typically at least half your highest annual base salary over the preceding two years.
If your employer handed you a non-compete to sign six months into your job and offered nothing in return, the agreement may not be enforceable depending on your state. It’s one of the most common grounds for successfully challenging a non-compete and is often overlooked.
What Enforcement Looks Like
Enforcement almost always starts with a cease-and-desist letter from the employer’s attorney. Most disputes end there, because most employees cannot afford to fight, and most employers would rather scare a former worker into compliance than litigate.
When it escalates, it moves fast. The employer typically asks for a temporary restraining order, which can be granted within days and without a full hearing. A TRO can prohibit you from starting your new job while the court sorts things out. Then comes a motion for a preliminary injunction, where both sides present evidence and the judge decides whether to keep the restriction in place through the end of the case. If the employer can show you had access to trade secrets or key client relationships, courts are more willing to step in quickly.
Read the entire agreement before assuming a non-compete is unenforceable and acting accordingly. Many include fee-shifting clauses that make the losing party pay the winner’s legal costs. Some include indemnification language requiring the employee to cover all the employer’s enforcement expenses. Those boilerplate paragraphs about attorneys’ fees can matter more than the restriction itself.
What Employers Are Using Instead
As non-competes face tighter limits, employers are shifting to other restrictive covenants that courts tend to enforce more readily.
- Non-solicitation agreements. These prohibit you from contacting the employer’s clients or recruiting its employees after you leave, but they don’t stop you from working for a competitor. Courts see them as less burdensome because you can still earn a living in your field. Some states apply their own salary thresholds, typically lower than for non-competes.
- Non-disclosure agreements. These restrict you from sharing confidential business information or trade secrets. A well-drafted NDA protects proprietary information without limiting where you can work. Some employers draft them so broadly they function as non-competes in disguise.
- Garden leave clauses. The employer pays you during the restricted period in exchange for your agreement not to compete. More common in executive contracts and in states that require them as a condition of enforceability.
One line stays bright: agreements between competing employers not to hire each other’s workers are treated as potential criminal antitrust violations, not ordinary contract disputes. The joint federal labor task force launched in 2025 is actively investigating these arrangements, and criminal convictions with substantial prison sentences have already come out of that enforcement.