The change in presidential administrations has resulted in changes in leadership at the Federal Trade Commission (FTC) and National Labor Relations Board (NLRB). These changes have potential implications with respect to enforcement of non-compete agreements at the federal level.
At the FTC, Andrew Ferguson has replaced the prior FTC Chair, Lina Khan. Under Ms. Khan’s leadership, the FTC had issued a Noncompete Rule that effectively banned most noncompete agreements with employees. In August 2024, that Rule was blocked by a court in the Northern District of Texas before it went into effect. The FTC filed an appeal of that decision, and its appeal remains pending at the Fifth Circuit at this time. Significantly Mr. Ferguson had dissented against the Noncompete Rule when it was originally issued. With Mr. Ferguson in charge and an anticipated Republican majority at the FTC in the near term going forward, many expect the FTC will drop its appeal and rescind the Noncompete Rule.
Similarly, the NLRB has a new Acting General Counsel, William B. Cowen. Mr. Cowen issued a memorandum on February 14, 2025, rescinding numerous memoranda that had been issued by his predecessor, Jennifer Abruzzo. Among the rescinded memoranda are two titled GC 23-08 and 25-01, in which the prior General Counsel had taken the position that non-compete agreements may unlawfully “chill” employees in the exercise of their rights under the National Labor Relations Act (NLRA). Although General Counsel memoranda do not change the current state of the law, they do provide guidance to Board agents charged with enforcing the NLRA so they have a practical impact.
Pending further developments, it appears that (at least for now) the interpretation and enforcement of non-compete agreements is likely to remain an issue primarily of state law.