Noncompete agreements have long been contentious. Many employers view them as essential safeguards for protecting intellectual property, customer relationships, pricing structures, and operational processes. Many workers — along with labor advocacy groups — disagree, arguing that noncompetes limit employee 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 noncompete agreements. But that rule never took effect — and now it won’t. On September 5, 2025, the FTC announced it was moving to dismiss its lingering appeals in two legal challenges to the final rule. Here’s what employers should know about the noncompete ban that never was.
Final FTC Noncompete Rule Review: What the Proposed Noncompete Ban Included
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. Employers also would have been prohibited from entering into new noncompete agreements.
However, there was a notable exception: existing noncompetes for “senior executives” would have remained in force. The final rule defined these as employees earning more than $151,164 per year and serving in policy-making positions, such as:
- The business’s president,
- The chief executive officer (or equivalent),
- Any other officer with policy-making authority, or
- Any other individual with comparable policy-making authority.
The FTC had expected the effective date to be September 4, 2024, but immediate legal challenges delayed enforcement. Many observers doubted the rule would survive under a new presidential administration. Sure enough, the FTC filed motions in federal court in September 2025 to dismiss its appeals, leaving earlier rulings that vacated the rule in place.
When announcing the decision, FTC Chair Andrew Ferguson called the final rule “patently illegal” and said it “would never survive judicial review.” Still, Ferguson emphasized that the agency has not abandoned its efforts to challenge potentially unlawful noncompetes, warning that firms using restrictive agreements could face FTC scrutiny and possible enforcement actions.
How Employers Can Reduce Risk & Avoid Noncompete Scrutiny
If your organization uses noncompetes or plans to continue doing so, it’s important to stay compliant and reduce risk. Consider these steps:
Review Existing Agreements
Identify employees currently bound by noncompete agreements and assess whether those restrictions remain necessary or enforceable under state law. Some states have banned noncompetes entirely, while others limit them to higher-paid workers.
Narrow the Scope
If you continue to use noncompetes, restrict them to key employees who have genuine access to trade secrets or sensitive business data. Keep the duration and geographic scope as reasonable as possible.
Consider Alternatives
Explore using or strengthening confidentiality, nonsolicitation, and intellectual property protection agreements. These alternatives can often protect business interests without restricting future employment opportunities.
Consult Legal Counsel
Before enforcing or updating any agreement, consult with employment law counsel familiar with FTC guidance and state-specific rules. This helps ensure enforceability and compliance with evolving regulations.
Strengthen Retention Efforts
Attracting and retaining top talent often depends more on competitive compensation, career growth opportunities, and a positive workplace culture than on restrictive contracts. Focusing on engagement and rewards can reduce turnover without legal complications.
Still in Play: What Employers Should Expect Next
Although the FTC’s broad noncompete ban is no longer advancing, regulatory and legal scrutiny of these agreements remains very much in play. State-level restrictions continue to evolve, and enforcement efforts are expected to continue in specific industries.
Now is an ideal time to review your employment agreements, assess potential legal exposure, and focus on retention strategies that protect your organization while maintaining compliance.
Our team can help you evaluate compensation structures, benefits, and other programs designed to attract and retain skilled employees — without relying on overly restrictive agreements.