In 2024, the Federal Trade Commission (FTC) promulgated a noncompete ban, but it was struck down by several courts. Our firm has covered the progression of the noncompete ban extensively in other posts.
The noncompete ban being struck as well as the change in administration left many of us wondering what is next for federal efforts to regulate noncompetes. In 2026, we are catching glimpses of an answer.
A Summary of the FTC Noncompete Ban
The FTC originally proposed a total ban on noncompetes in January 2023. The ban, as proposed, would eliminate noncompetes with employees moving forward and void most noncompetes retroactively. The rule underwent public notice and comment, and the final rule was adopted in April 2024 with a scheduled effective date of September 4, 2024.
The final rule faced significant legal scrutiny and was invalidated by courts in Texas and Florida. Those courts found the rule was an overreach of the FTC’s rule-making authority and was arbitrary and capricious due to its broad scope. The decisions were appealed to the Fifth and Eleventh Circuit Courts of Appeals.
The legal battle came to a grinding halt in September 2025. After Donald Trump’s reelection in 2024, there was a change in leadership within the FTC. Commissioner Andrew N. Ferguson, who had dissented to the noncompete ban under the previous administration, became the FTC Chairman. The FTC then voted 3-1 to withdraw the appeals in the Fifth and Eleventh Circuit, and it abandoned enforcement efforts as to the complete ban.
The “In Between”
With the country in limbo between the abandonment of the noncompete ban and any update on how the FTC would address noncompetes going forward, many states imposed or considered complete bans, income limitations, exemptions for certain professions, and other restrictions on noncompetes. Some state laws even impose civil or criminal penalties for noncompliance.
The FTC’s “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements”
While many initially thought the FTC under the current administration might shy away from aggressively scrutinizing noncompetes, that has not been the case. The current FTC has reiterated that it viewed the previous FTC’s efforts to ban noncompete as an overreach of agency authority but has nevertheless indicated that it intends to use its enforcement and investigative powers to continue addressing the harms associated with abusive and unreasonable noncompetes.
Most recently, on January 27, 2026, the FTC held a virtual workshop focusing on “the Trump-Vance FTC’s efforts to highlight the negative impact of noncompetes on American workers and put business on notice of its current enforcement priorities.” This workshop, “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements,” consisted of remarks from Chairman Ferguson and Commissioner Mark R. Meador, as well as three panels discussing anticompetitive noncompete agreements, policy considerations, and the economic impacts of noncompetes. The following are key takeaways from the workshop:
Key Takeaways from the FTC Workshop
- The Trump-Vance FTC Appears Geared to Aggressively Weed Out Anticompetitive Noncompetes. While the FTC has abandoned the broad noncompete ban, it appears to have jumped in with both feet to address anticompetitive noncompetes. Speakers from the FTC made clear, in no uncertain terms, that they believe many noncompete agreements could violate federal antitrust laws such as the Sherman Act and the FTC Act. Chairman Ferguson noted that noncompetes must serve some pro-competitive goal and if they are not tailored to do so, employers implementing such agreements will “incur a significant risk of legal action.”
Speakers also discussed several actions taken in the past and currently pending which seek to strike down unreasonable noncompete agreements. More specifically, the FTC has pursued unreasonable noncompetes that prevent workers from pursuing better job opportunities and cause harm not only to workers, but to competing companies and consumers. The FTC has also issued warning letters to healthcare employers and staffing companies who may be implementing unfair and anticompetitive noncompetes. The existence of ongoing nonpublic investigations was also confirmed.
- Noncompete Validity Will Be Evaluated on a Case-by-Case Basis for Violations of Federal Antitrust Law. A common theme throughout the workshop was the FTC’s adherence to analyzing noncompete agreements on a case-by-case basis to determine whether they violate federal antitrust laws. Because the FTC finds its enforcement power within specific federal statutes with stringent limitations, the current FTC acknowledges they do not have the authority to implement a blanket standard or rule on a far-reaching scale. As such, each noncompete must be individually assessed for compliance with federal law. Some elements Commissioner Meador identified as potentially relevant to the FTC’s analysis are employee wages and skill level, whether the noncompete is in reference to an employment contract or an independent contractor agreement, what the market power of the contracting parties are, and whether there is a likelihood of “free riding” on an employer’s trade secrets or investments in development and training. These factors align with standard elements state courts generally use in analyzing noncompetes.
The FTC also expressed ongoing interest in members of the public making complaints directly to the FTC regarding noncompetes believed to violate antitrust law. Recent complaints from the public appeared to have identified certain industries of interest for the FTC, such as healthcare, and have triggered enforcement actions.
- The FTC Appears Particularly Concerned with the Economic and Labor Force Impacts of Noncompetes. A major talking point throughout the workshop is the economic impact anticompetitive noncompetes can have on the broader economy, as well as the finances of individual workers. Chairman Meador discussed concerns for the impact anticompetitive noncompetes have on “affordability” for the everyday worker. In culmination with an entire panel on the economic impacts of anticompetitive noncompete agreements, the FTC has emphasized an interest in wages, worker mobility, workplace safety, costs for healthcare, and other related issues which may be impacted by noncompetes.
- Employers Should Consider Alternative Restrictive Covenants to Protect Legitimate Business Interests. While the FTC acknowledges noncompetes are not going away entirely, panelists urged employers to also consider alternative restrictive covenants that may protect legitimate business interests in a manner less restrictive than a noncompete. These can include nonsolicitation agreements, which protect an employer’s relationship with customers, or nondisclosure agreements, which protect an employer’s confidential information.
As the full force of the current FTC’s response to noncompetes has yet to be seen, implementing additional restrictive covenants that are unlikely to be as vigorously scrutinized as a noncompete is a useful safety net for businesses seeking to protect legitimate interests.
- The Through Line is Reasonableness. Court analysis of noncompete agreements is highly fact-intensive and there is no “one size fits all” format that will be upheld by the courts. Like many courts, panelists at the workshop noted that reasonable limitations on time and geography are not dispositive of the reasonableness of a noncompete. There can be noncompetes that are reasonable in time and geography but are rendered unreasonable by other factors. For instance, panelists noted noncompete agreements that apply to volunteers or seasonal interns should arguably never be enforceable regardless of whether they are limited in time and scope.
Ultimately, the reasonableness of a noncompete in the context in which it is applied must be carefully analyzed, as no one factor, or element is dispositive.
Ensure Compliance
While there may have been concerns that federal agencies would no longer address unreasonable noncompetes after the FTC withdrew its appeals in the Fifth and Eleventh Circuits, the FTC instead appears ready, willing, and able to take on anticompetitive noncompetes that cause harm to workers, consumers, and companies.
Given the ever-evolving federal regulatory efforts and the variance in state law in this area, businesses should consult with counsel to ensure their noncompetes are compliant with applicable laws and that they are appropriately using other restrictive covenants which can also protect legitimate business interests.
If you have a question about how your business is using noncompetes and other restrictive covenants, please feel free to reach out.