FTC Non-Compete Ban

The FTC's 2024 rule attempting to ban most non-compete agreements nationwide — largely blocked by courts as of 2024, but still shaping how non-competes are negotiated.

In April 2024, the Federal Trade Commission (FTC) issued a sweeping rule that would have banned most non-compete agreements for almost all US workers. Under the rule, existing non-competes for non-senior executives would be unenforceable, and new non-competes would be prohibited entirely. The FTC estimated the rule would affect approximately 30 million US workers and, according to its own analysis, would increase worker earnings by $300 billion annually by restoring labor market mobility.

The rule was challenged immediately in federal court. In August 2024, a federal district court in Texas issued a nationwide injunction blocking the rule from taking effect, finding that the FTC lacked the statutory authority to issue such a broad, categorical ban. The FTC appealed, but as of late 2024, the ban remained blocked. The legal battle is expected to continue through the federal courts, and the rule's ultimate fate depends on both the outcome of that litigation and the composition of future FTC leadership.

Even with the federal ban blocked, the legal and cultural landscape around non-competes has shifted significantly. Several states — California, Minnesota, North Dakota, Oklahoma, and others — already ban or severely restrict non-competes as a matter of state law. Many more states have narrowed their scope or enforceability in recent years. The FTC action, even if ultimately unsuccessful, has made non-compete clauses more visible in negotiations, more frequently challenged, and more scrutinized by employers worried about enforcement.