Updated: June 9, 2026
Did the FTC Ban Non-Compete Agreements?
No – and the effort to do so is now officially over.
After a federal court struck down the FTC's nationwide non-compete ban in August 2024, the FTC appealed. That appeal never reached a decision. On September 5, 2025, the FTC voted 3-1 to dismiss its appeal and formally abandon the ban. FTC Chairman Andrew Ferguson – one of two commissioners who voted against the original rule – stated the agency would instead focus on targeted enforcement actions against companies that misuse non-compete agreements in violation of existing law.
The FTC's pivot is already underway. Within days of dropping the appeal, the agency filed its first enforcement action against a company whose blanket, nationwide non-competes covered nearly 1,800 low-wage workers, and sent warning letters to large healthcare employers urging them to review their employment agreements for compliance.
Non-compete agreements remain governed by state law. In Texas, non-compete agreements are legal and enforceable if they meet certain requirements. Texas employers should be aware, however, that the FTC retains authority to investigate and act against agreements it considers unreasonably restrictive or anticompetitive – regardless of whether they comply with state law.
Review the full timeline of developments below.
What Happened With the FTC's Attempt to Ban Non-Compete Agreements?
The FTC's effort to ban non-compete agreements nationwide began in January 2023 and ended in September 2025 – without a single day of enforcement. Here is a complete timeline of how it unfolded:
- January 5, 2023 – The Federal Trade Commission proposed a rule that would ban non-compete agreements nationwide.
- April 19, 2023 – The proposed rule closed for public commentary after receiving close to 30,000 responses.
- April 23, 2024 – The FTC voted 3-2 to publish a final rule banning employers from entering into non-compete clauses with workers on or after the effective date.
- April 23–25, 2024 – Within hours of the FTC vote, three separate lawsuits were filed challenging the rule in federal courts in Texas and Pennsylvania.
- May 7, 2024 – The FTC published the final rule in the Federal Register, setting a September 4, 2024 effective date.
- May 9–10, 2024 – Two of the lawsuits were consolidated, and the plaintiffs filed a motion for a preliminary injunction to block enforcement.
- June 21, 2024 – A Florida real estate company filed a third lawsuit seeking to block the rule, arguing it oversteps government authority and interferes with state laws and existing contracts.
- June 28, 2024 – The Supreme Court overruled the Chevron deference doctrine in a 6-3 decision, directing courts to exercise independent judgment on questions of federal agency authority rather than deferring to the agency's own interpretation. This exposed the FTC rule to greater judicial scrutiny.
- July 3, 2024 – A federal judge in Dallas granted a preliminary injunction blocking the FTC from enforcing the ban against the plaintiffs, finding the FTC "lacks substantive rulemaking authority with respect to unfair methods of competition."
- July 23, 2024 – A federal judge in Pennsylvania reached the opposite conclusion, finding the plaintiff failed to establish the FTC lacked authority to issue the rule.
- August 20, 2024 – The Dallas judge issued a final ruling setting aside the FTC's non-compete rule nationwide, finding the FTC exceeded its statutory authority and that the rule was arbitrary and capricious.
- September 4, 2024 – The date the rule was scheduled to take effect passed without enforcement, blocked by the court's ruling.
- October 18, 2024 – The FTC appealed the Dallas ruling to the Fifth Circuit Court of Appeals.
- January 2, 2025 – The FTC filed its opening brief in the Fifth Circuit urging the court to reverse the district court's ruling.
- January 20, 2025 – Following a change in presidential administration, the new FTC leadership signaled a shift in strategy away from the broad rulemaking approach toward targeted, case-by-case enforcement.
- March 2025 – The FTC launched a Joint Labor Task Force focused on non-compete agreements and other labor market restrictions, and requested a 60-day pause in the Fifth Circuit appeal to evaluate whether to continue pursuing the ban.
- July 2025 – With the Fifth Circuit appeal still pending, the FTC publicly signaled it was moving toward formally dropping its defense of the nationwide ban in favor of targeted enforcement actions against specific companies misusing non-competes.
- September 5, 2025 – The FTC voted 3-1 to dismiss its Fifth Circuit appeal and formally abandoned the nationwide non-compete ban. FTC Chairman Andrew Ferguson stated the agency would instead focus on "addressing non-compete agreements through enforcement actions against companies that misuse them in violation of the law."
- September 4–5, 2025 – One day before abandoning its appeal, the FTC filed its first targeted enforcement action under the new approach, filing a complaint against Gateway Pet Cremation Services – the nation's largest pet cremation business – alleging the company's blanket use of nationwide non-competes for low-wage workers violated federal law. The proposed consent order required Gateway to stop enforcing non-competes covering nearly 1,800 employees immediately.
- September 10, 2025 – The FTC sent warning letters to several large healthcare employers and staffing firms, urging them to review their employment agreements and signaling that the healthcare sector is a priority for targeted enforcement.
Where Things Stand Today
The nationwide ban is dead. Non-compete agreements remain governed by state law. The FTC retains authority to pursue enforcement actions against companies it determines are using non-competes in anticompetitive ways – with particular scrutiny directed at blanket agreements applied to low-wage workers, overbroad geographic restrictions, and agreements that do not protect legitimate business interests.