On September 5, 2025, the Federal Trade Commission (FTC) voluntarily dismissed its appeal of court decisions that had blocked its efforts to implement a nationwide ban on non-competition agreements. This voluntary dismissal was largely anticipated in light of the change in administration and consequent leadership change at the FTC.
The FTC’s proposed ban had been introduced in April 2024 and sought to eliminate most non-compete provisions in employment contracts across the country. That FTC action generated substantial public discourse and was met with swift legal challenges. Courts in Texas and Florida ultimately ruled against the ban’s implementation. The Texas federal court issued a nationwide injunction on August 20, 2024 that prevented the FTC’s rule from taking effect. As demonstrated by this voluntary dismissal, the revamped FTC under the current administration has pivoted away from its pursuit of a nationwide ban. A summary of the FTC’s proposed rule and its review by the courts can be found in our prior updates on this topic, links for which are set forth below.
Significantly, the FTC has not abandoned this issue entirely. Rather, the FTC has expressed its intention to approach the lawfulness of non-compete agreements on a case-specific basis. In fact, the day before the dismissal of its appeal, the FTC issued an administrative complaint against an employer, Gateway Services, Inc., for its alleged unlawful use of non-compete agreements. Among the alleged issues identified by the FTC were the company’s unnecessary restriction on hourly low-skilled workers, the overbroad geographic application of the restrictions, and the company’s use of agreements in areas where they no longer had operations. This enforcement action shows that the FTC is still likely to be active in this area at least on a case-specific targeted basis, notwithstanding its decision to abandon a nationwide ban.