The Federal Trade Commission (FTC) has formally abandoned its nationwide non-compete ban. In a 3-1 vote, the FTC dismissed the non-compete rule which had been previously stalled in August 2024 by a Texas federal court and had yet to officially take effect.
The FTC will now move to a case-by-case enforcement policy and the Commission will continue to have the authority to investigate non-compete agreements that appear unreasonable or anticompetitive. In a statement released earlier this month, Commissioner Mark Meador offered a proposed framework for evaluating noncompete agreements that would focus on context, necessity and proportionality to “protect legitimate business investments while ensuring that noncompetes do not unduly restrict competition or worker mobility.”
“Noncompetes should not be judged under a blanket rule of legality or illegality,” Meador wrote in his statement. “A contextual framework—grounded in traditional antitrust principles and supplemented by the FTC’s Section 5 authority—offers a more workable approach. This approach would be more akin to treating noncompetes as being subject to a ‘rebuttable presumption’ of illegality, with the employer bearing the burden to demonstrate that the noncompete is reasonably necessary to achieve legitimate business interests and narrowly tailored toward that end.”
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