FTC Abandons Non-Compete Rule Amid Policy Shift

10/1/2025
On September 5, 2025, in a significant policy reversal, the Federal Trade Commission (FTC) announced its official withdrawal of its non-compete rule that aimed to ban non-compete agreements for most U.S. workers. The withdrawal of the rule was accompanied by the dismissal of appeals that had been filed in an effort to overturn a federal court’s decision striking down the rule.
On April 23, 2024, the FTC adopted the non-compete rule, which would have voided employer contracts, workplace policies, and compensation arrangements that prohibit, penalize, or in practice prevent a worker from working, with a few limited exceptions. At the time, the FTC argued that such agreements suppressed wages and hindered job mobility, thereby stifling competition and innovation in the labor market. However, the rule faced immediate legal challenge. In August 2024, the U.S. District Court for the Northern District of Texas ruled that the FTC lacked the statutory authority to enforce the rule, deeming it “unreasonably overbroad” and “arbitrary and capricious.” The Department of Justice subsequently filed appeals of the decision.
Related Practices: Healthcare Law
Related Attorney: John D. Fanburg, Edward Hilzenrath, Vanessa Coleman
Related Industry: Healthcare