The FTC Ban on Noncompetes: A Dead Letter is now Deader
About two weeks ago (August 13, 2025, to be precise), President Trump revoked another of President Biden’s Executive Orders. Entitled “Revocation of Executive Order on Competition,” the action was uncharacteristically concise: “Executive Order 14036 of July 9, 2021 (Promoting Competition in the American Economy), is hereby revoked.”
EO 14036 (issued July 9, 2021) was a detail-laden order that set forth a “Whole-of-Government” policy ostensibly intended to establish a comprehensive policy on competition with a primary focus on anticompetitive activity through the use of antitrust laws to stem industrial concentration and market abuses across a number of economic sectors (e.g., agriculture, the internet, healthcare, prescription drugs, etc.). Relevant to today’s blog, the EO “encouraged” the Chair of the Federal Trade Commission (“FTC”) “to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” EO 14036 § 5(g).
Following the customary (i.e., lengthy) notice and comment process, the FTC issued a final rule on April 23, 2024. Were it to have gone into effect later that year (ironically just after Labor Day), employers would have been prohibited from requiring their employees to sign non-competes going forward and be barred from enforcing existing non-competes except those for senior executives. Employers also would have been required to notify employees that existing noncompete agreements no longer would be enforced (except, again, for senior executives).
The FTC rule, however, never went into effect following the issuance of several injunctions that barred the FTC from enforcing the rule. One of the injunctions had nationwide effect and was made permanent rendering the FTC rule a dead letter. Last year, I blogged about this injunction. See https://www.awrcounsel.com/blog/2024/8/28/we-have-met-the-enemy-texas-court-strikes-down-ftc-non-compete-ban. In that blog (as well as in an earlier blog, (see https://www.awrcounsel.com/blog/2023/2/15/the-sky-is-falling-competing-proposals-to-prohibit-noncompete-agreements), I expressed my longstanding skepticism about the effectiveness of non-compete clauses when they’re governed by a patchwork of state laws and regulations. When I’ve been asked about whether a particular clause is enforceable, my answer almost always is “it depends” because their enforceability hinges on case-by-case assessments of the reasonableness of clauses. Many states apply the “it depends” analysis in their own unique ways. Others ban them outright..
The FTC ban on non-competes would have established a national rule banning non-competes that, on the surface, would be easy to apply. As I noted in my earlier blogs, a national rule is appealing; however, not the FTC’s national rule. I personally favor a nuanced approach that would allow businesses to place limitations on senior executives while barring restrictions on rank-and-file workers.
In any event, this all is kinda moot now. Although the FTC rule remains on the books, the national injunction bars its enforcement. While the Biden Administration appealed this (and other) injunctions, the Trump Administration’s FTC chair asked that the appeals be stayed while the administration evaluated its position on the rule. Trump’s revocation of the Biden EO no doubt will lead the Government to step back from its appeals permanently. This will make the non-compete regulation a paper tiger and I am confident that the Trump FTC ultimately will repeal the FTC regulation.