Federal Update
Where the Federal FTC Non-Compete Ban Stands
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There is no federal ban on non-compete agreements in effect. The Federal Trade Commission's 2024 Non-Compete Rule never took effect — a federal court set it aside before its effective date, the FTC abandoned its appeal in 2025, and the Commission formally removed the rule from the Code of Federal Regulations in 2026. Non-compete agreements remain governed by state law.
What happened
- April 23, 2024 — The FTC issued a final Non-Compete Rule (16 CFR part 910) that would have banned most employee non-competes nationwide, with a September 4, 2024 effective date.
- August 20, 2024 — In Ryan, LLC v. FTC (Northern District of Texas), the court set the rule aside nationwide, holding the FTC lacked statutory authority to issue it, and barred the rule from taking effect.
- September 5, 2025 — Under Chairman Andrew Ferguson, the FTC voted 3-1 to drop its appeal and accede to the rule's vacatur.
- September 2025 — Following the FTC's vote, the Fifth Circuit dismissed the FTC's appeal, leaving the rule's vacatur in place.
- February 12, 2026 — The FTC published a Federal Register notice formally removing the Non-Compete Rule from the Code of Federal Regulations.
What it means now
Because the rule was vacated and removed, employers and workers are governed by state non-compete law, which varies widely — from near-total bans (for example, California) to reasonableness tests in most states. The FTC has not adopted a replacement rule, but it retains authority under Section 5 of the FTC Act to challenge specific non-compete practices case by case.
FAQ
Is there a federal ban on non-competes in 2026?
No. The FTC's 2024 Non-Compete Rule was vacated by a federal court and never took effect, and the FTC removed it from the Code of Federal Regulations in February 2026. Non-competes are governed by state law.
Did the FTC appeal the ruling that struck down the rule?
The FTC initially appealed, but in September 2025 it voted to drop the appeal and accept the rule's vacatur. The Fifth Circuit then dismissed the appeal, leaving the vacatur in place.
Can the FTC still challenge non-competes?
Yes. The FTC has no non-compete rule, but it retains authority under Section 5 of the FTC Act to investigate and challenge specific non-compete practices case by case.
Sources
This is legal research, not legal advice.