There is no federal non-compete ban in force. The Federal Trade Commission finalized a rule in April 2024 that would have voided most non-compete agreements nationwide, but a federal court in Texas struck it down before it could take effect, and in September 2025 the FTC voted 3-1 to drop its appeal and accept that outcome.1Federal Trade Commission. Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule Whether your non-compete is enforceable is now almost entirely a question of state law.
What Happened to the FTC Rule
The rule was scheduled to take effect on September 4, 2024. It never got there. In Ryan, LLC v. Federal Trade Commission, a federal judge in the Northern District of Texas blocked the entire regulation on August 20, 2024.2Justia. Ryan LLC v Federal Trade Commission, No. 3:2024cv00986 – Document 211 (N.D. Tex. 2024)
The court’s reasoning had two pillars. It concluded the FTC lacked statutory authority to issue a sweeping substantive ban under Section 6(g) of the FTC Act, reading that provision as housekeeping authority rather than the power to prohibit an entire category of business practice nationwide. It also found the rule arbitrary and capricious under the Administrative Procedure Act, because the FTC imposed a one-size-fits-all ban without adequately explaining why it rejected narrower alternatives. The result was a nationwide vacatur: the rule was set aside everywhere, not just for the plaintiff.
An appeal could have revived it. The FTC chose not to pursue that path. On September 5, 2025, the Commission voted 3-1 to dismiss its appeals in both the Texas case and a parallel Eleventh Circuit challenge, and to accept the vacatur.1Federal Trade Commission. Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule The FTC’s current chairman and one commissioner had dissented from the original rule on authority grounds. With the agency itself now agreeing the rule should not stand, no pending federal litigation could bring it back.
What the Rule Would Have Changed
The vacated rule would have made it illegal for employers to enter into new non-compete agreements with nearly all workers, and it would have voided most existing ones.3Federal Trade Commission. FTC Announces Rule Banning Noncompetes Employers would have had to send written notice to every affected worker explaining that the non-compete could no longer be enforced.
The FTC’s definition of “worker” was broad: employees, independent contractors, interns, externs, volunteers, apprentices, and sole proprietors providing services to a client, at any pay level.4Federal Trade Commission. Noncompete Rule The rule used a functional test rather than looking at contract labels. A clause did not have to say “non-compete” to be covered; if it effectively stopped someone from taking a new job or starting a business, it counted. Training repayment agreements with inflated payback costs and overbroad non-disclosure agreements that functioned as employment locks would have fallen within the ban.5Federal Trade Commission. Noncompete Clause Rule – A Compliance Guide for Businesses
Two exceptions were built in. Existing non-competes for senior executives, defined as workers in policy-making positions earning at least $151,164 per year, would have remained enforceable, though employers could not create new ones. And non-competes tied to a genuine sale of a business or its operating assets were carved out entirely.4Federal Trade Commission. Noncompete Rule None of this now applies.
Other Federal Efforts Still Moving
Two federal avenues survive the FTC rule’s collapse, though neither offers the blanket protection the rule would have provided.
The NLRB’s Theory Under the National Labor Relations Act
In May 2023, the NLRB’s General Counsel issued a memo arguing that overbroad non-competes violate the National Labor Relations Act by preventing workers from exercising rights to organize and collectively push for better conditions.6National Labor Relations Board. NLRB General Counsel Issues Memo on Non-Competes Violating the National Labor Relations Act The theory is that a worker bound by a non-compete cannot credibly threaten to leave for a competitor, which undercuts bargaining leverage. In June 2024, an NLRB administrative law judge ruled that certain non-compete and non-solicitation provisions did violate the NLRA, and the agency obtained at least one settlement involving non-compete and training repayment provisions.7National Labor Relations Board. General Counsel Abruzzo Issues Memo on Seeking Remedies for Non-Compete
The limits are significant. The NLRA covers employees only, not independent contractors or supervisors with genuine managerial authority. The NLRB also proceeds case by case rather than issuing a blanket ban, so any relief is slow and fact-specific. The General Counsel’s position may shift with changes in administration.
The Workforce Mobility Act
Senators reintroduced the Workforce Mobility Act (S. 2031) in the 119th Congress. The bill was referred to the Senate Committee on Health, Education, Labor, and Pensions in June 2025 and has not advanced further.8Congress.gov. S.2031 – Workforce Mobility Act of 2025 If passed, it would codify a non-compete ban into federal statute rather than relying on agency rulemaking, sidestepping the authority problem that killed the FTC rule. Earlier versions have been introduced in prior sessions without reaching a floor vote.
How State Law Now Decides Your Non-Compete
With no federal ban in place, enforceability turns on state law. Four states currently ban non-compete agreements outright in the employment context, though they generally still allow them in connection with a business sale. More than 30 additional states plus the District of Columbia impose some form of restriction.
Several states use an income floor: if you earn below a set threshold, your employer cannot enforce a non-compete against you. As of 2026, these thresholds range from under $40,000 in some states to over $160,000 in others, with some jurisdictions setting different figures for employees and independent contractors. A few states require employers to give advance notice before a non-compete takes effect, provide separate consideration beyond continued employment, or include the clause in the initial offer letter rather than presenting it after a worker has already started.
The practical point: if you are subject to a non-compete, the enforceability question is almost entirely about which state’s law applies. That is typically where you work, though choice-of-law provisions in your contract can complicate the analysis. Checking your state’s current restrictions is more useful than waiting for federal action that may not come.
Non-Solicitation Agreements Are a Separate Question
If your contract restricts you from poaching former clients or recruiting former colleagues rather than from working for a competitor at all, you likely have a non-solicitation agreement rather than a non-compete. The distinction matters because non-solicitation clauses face a much lower bar for enforcement. Courts generally view them more favorably since they do not prevent you from earning a living; they limit how you can leverage relationships built at your old job.
A non-solicitation agreement drafted too broadly can still function like a non-compete. If a clause effectively blocks you from contacting anyone who was ever a customer of your former employer, regardless of whether you personally worked with them, a court may refuse to enforce it or narrow its scope. Without a federal standard, enforceability again depends on your state’s reasonableness analysis, which typically looks at whether the restriction protects a legitimate business interest, covers a defined group of contacts, and runs for a limited time.