The Federal Trade Commission (FTC) attempted to ban non-compete agreements in 2024. But employers have won multiple battles arguing for enforcement of non-compete agreements in front of the National Labor Relations Board and U.S. District Courts in Texas and Florida. And, as a result, the rule was vacated by a permanent injunction on Aug. 20, 2024. 

What is going on in the appeals?

The FTC appealed the Texas and Florida cases to the Fifth and Eleventh Circuits in late 2024. The agency argued the rule should not have been overturned. But in February 2025, FTC Chairman Andrew Ferguson spoke at a conference where he indicated the agency would consider whether to continue pursuing the appeals. Ferguson issued a memorandum directing the FTC to form a labor task force to investigate various deceptive, unfair, and anticompetitive labor practices—including noncompete agreements. 

Due to the FTC's desire to look into the matter more, the FTC filed motions to stay its appeals for 120 days. And, both courts granted the motions. Thus, employers will be kept in limbo over the appeals until July 2025. 

What does the stay mean for employers?

While the appeals are stayed, state law continues to rule the day when it comes to noncompete agreement enforceability. And, state law varies. Moreover, state law is constantly changing. For example, Ohio, a longtime haven for noncompete agreements, recently proposed legislation that would ban noncompete agreements. And, some states, like California, ban noncompete agreements. Washington state imposes penalties for employers who attempt to enforce an unenforceable noncompete agreement.

What precautions can employers take if noncompete agreements are unenforceable?

Employers can include provisions prohibiting disclosure of confidential information and provisions prohibiting the solicitation of a company's employees and customers. While these provisions do not provide the same level of protection as a noncompete, they still protect a company's legitimate business interests.

How can employers know if the agreements are enforceable?

Employers should consider reviewing agreements with counsel to ensure they comply with various state laws.