Authors: Carly Kligler and Abigail Blaser

Just over one year ago, the Federal Trade Commission issued a rule banning nearly all noncompete agreements (the “Rule”).[i] The status of the Rule remains in flux amid legal challenges[ii] and changes brought to the FTC with the Trump Administration. Given the continued uncertainty, it is worth taking a moment to assess the status of the Rule today and consider where things may be headed next.

Background of the Rule

Adopted on April 23, 2024, the Rule classifies all noncompete agreements as unfair methods of competition and therefore in violation of Section 5 of the Federal Trade Commission Act. Though sweeping, the Rule provided a narrow exception for noncompete agreements binding senior executives and entered into before the Rule’s effective date. For the purpose of the Rule, senior executives includes those workers in “policy-making position[s]” and meeting a certain compensation threshold.[iii] According to the FTC, fewer than 1% of all workers are estimated to be senior executives under the Rule.[iv] However, all noncompete agreements entered into after the effective date of the Rule will be deemed unenforceable, regardless of whether they bind low-level employees or the senior-most executives at a company.[v] Additionally, the Rule contains a notice provision that requires employers to notify current and former employees bound by noncompete agreements that are affected by the Rule no later than the effective date of the Rule.[vi]

Originally, the effective date of the Rule was scheduled to be September 4, 2024, however, the legal challenges discussed further below have forestalled the Rule from taking effect as planned.

Legal Challenges

Unsurprising given the groundbreaking nature of the Rule, it was quickly met with a litany of legal challenges. The FTC faced litigation over the Rule in Pennsylvania, Florida, and Texas that challenged the Rule on the basis that the FTC had exceeded its statutory authority under the Federal Trade Commission Act and that the Rule was arbitrary and capricious. Though the FTC successfully avoided a preliminary injunction in the Pennsylvania lawsuit, federal district courts in both Florida and Texas ruled against the FTC and enforcement of the Rule. Most notably, a judge in the Northern District of Texas issued a nationwide injunction against the Rule, putting enforcement at least temporarily on ice.[vii]

Just weeks before the Rule was intended to go into effect, the nationwide injunction provided potential relief to employers facing a deadline to notify current and former employees about the new status of their noncompete agreements under the Rule. The injunction also allowed employers to continue enforcing their noncompete agreements for the time being. However, these legal battles are not yet over, and the status of the Rule is not yet settled, as appeals are pending in both the Fifth and Eleventh Circuits.[viii]

Changes Brought with the Trump Administration

In the midst of these legal battles, the Trump Administration has brought its own agenda to the FTC. This has put the future of the Rule into further question. Although President Trump and his FTC Chair, Andrew Ferguson, have expressed an intent to continue to combat anticompetitive behavior,[ix] Ferguson also previously voted against the adoption of the Rule.[x]

It appears for the moment that the Trump Administration is still mulling over how to move forward with the Rule. To that end, the FTC requested 120-day stays in the pending appeals at both the Fifth and Eleventh Circuits to allow the agency to reassess whether it will continue to defend the Rule.[xi] Those motions cited statements by Chairman Ferguson stating that the Commission needed to consider whether defense of the Rule was in the public interest and that he is “going to be presenting at some point [to his] colleagues the decision about whether to continue defending this rule.”[xii]

We will know more about the status of the FTC’s decision no later than mid-July when then FTC is required to submit status reports in both of the pending appeals.[xiii]

What are Employers to do Amidst the Uncertainty?

Since the Rule remains on shaky ground, employers may be questioning what steps they should take to protect their business and ensure compliance. While the ultimate status of the Rule remains unclear, employers can take steps now to ease the administrative burdens if it does go into effect and can strengthen policies to protect their company’s sensitive information even if their noncompete agreements become invalid.

To that end, employers can:

  • Continue to enforce noncompete agreements so long as the nationwide injunction remains in place;
  • Review contracts for individuals considered a senior executive under the Rule and ensure that an enforceable noncompete agreement is in place;
  • Prepare to conform with the notice requirement under the Rule by identifying employees and former employees currently bound by noncompete agreements and gathering the information needed to eventually send notices;
  • Review employment contracts with other forms of restrictive covenants, such as non-solicitation clauses, to check whether they are still enforceable under the Rule since it contains a catchall provision that prohibits terms effectively functioning as a noncompete agreement;
  • Reexamine company policies related to trade secret protection and non-disclosure agreements to ensure that sensitive information is adequately protected when and if the Rule takes effect; and
  • Continue to monitor the status of the Rule and remain informed of compliance deadlines if it takes effect.

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About the Authors

Carly Kligler

Carly Abramson Kligler, Partner

Carly specializes in litigating complex commercial disputes, including contract disputes, class actions, business torts, fiduciary duty, fraud, and product liability matters. Follow her on LinkedIn here.

Abigail Blaser

Abigail Blaser, Associate

Abigail Blaser is a litigation associate at Hilgers Graben and graduate of Notre Dame Law School. Follow her on LinkedIn here.

[i] “FTC Announces Rule Banning Noncompetes,” Fed. Trade Comm’n (Apr. 23, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes.

[ii] L. Berg, “FTC Asks 5th Circ. To Revive Noncompete Ban,” Law360 (Jan. 2, 2025), https://www.law360.com/articles/2279088/ftc-asks-5th-circ-to-revive-noncompete-ban.

[iii]“Non-Compete Clause Rule,” Fed. Trade Comm’n (Apr. 23, 2024) (to be codified at 16 C.F.R. pt. 910), https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf.

[iv] “Noncompetes: What You Should Know,” Fed. Trade Comm’n, https://www.ftc.gov/news-events/features/noncompetes.

[v] 16 CFR § 910.2(a)(2).

[vi] 16 CFR § 910.2(b).

[vii] T. Appling, B. Dryden, C. Hoffman, L. Perlman, & D. Sanders, “Federal Judge in Texas Blocks FTC’s Noncompete Rule,” Nat’l Law Rev. (Aug. 21, 2024), https://natlawreview.com/article/federal-judge-texas-blocks-ftcs-noncompete-rule.

[viii] L. Berg, “FTC Asks 5th Circ. To Revive Noncompete Ban,” Law360 (Jan. 2, 2025), https://www.law360.com/articles/2279088/ftc-asks-5th-circ-to-revive-noncompete-ban.

[ix] Exec. Order No. 14267, Reducing Anti-Competitive Regulatory Barriers, 90 Fed. Reg. 15629 (Apr. 9, 2025), https://www.whitehouse.gov/presidential-actions/2025/04/reducing-anti-competitive-regulatory-barriers/.

[x] B. Dryden, “One Year Later, FTC’s Noncompete Ban Remains on Life Support, as FTC Mulls Pulling the Plug,” Nat’l Law Rev. (Apr. 14, 2025), https://natlawreview.com/article/one-year-later-ftcs-noncompete-ban-remains-life-support-ftc-mulls-pulling-plug.

[xi] Id.

[xii] J. Foretek, “FTC Wants Pause on Noncompete Appeals, Pending Decision,” Law360 (March 10, 2025), https://www.law360.com/articles/2308546/ftc-wants-pause-on-noncompete-appeals-pending-decision.

[xiii]  B. Dryden, “One Year Later, FTC’s Noncompete Ban Remains on Life Support, as FTC Mulls Pulling the Plug,” Nat’l Law Rev. (Apr. 14, 2025), https://natlawreview.com/article/one-year-later-ftcs-noncompete-ban-remains-life-support-ftc-mulls-pulling-plug.