The Federal Trade Commission has officially removed its Biden-era rule that would have banned nearly all employment noncompete agreements from the Code of Federal Regulations. The rescission follows adverse rulings in federal courts in Florida and Texas and the Commission's September 2025 vote to drop its appeals of those decisions. With the categorical federal ban formally off the table, employers no longer face the prospect of a uniform national prohibition on noncompetesΓÇöbut the regulatory landscape is far from settled.
The immediate practical consequence is that noncompete regulation reverts to state law. That means employers can no longer plan around a single federal standard and instead must contend with an increasingly divergent patchwork of state statutes and judicial doctrines. Some states broadly prohibit or sharply restrict noncompetes, others impose income thresholds, notice requirements, or garden-leave obligations, and still others permit them subject to traditional reasonableness review. Employers with a multi-state workforce should audit their existing restrictive covenants jurisdiction by jurisdiction, confirm that each agreement is tailored to the governing state's requirements, and revisit choice-of-law and venue provisions in light of recent developments.
Just as important, the FTC has not exited the field. Rather than pursuing a categorical rule, the Commission has pivoted to case-by-case enforcement of noncompete practices it views as unfair methods of competition. In a notable recent action, the FTC ordered Rollins, Inc. to cease enforcing noncompete agreements against more than 18,000 workers. The message to employers is clear: overly broad restrictions, aggressive enforcement against low-wage or non-strategic employees, and covenants that appear designed to suppress labor mobility rather than protect legitimate business interests remain squarely within the FTC's sights.
In this environment, prudent employers should treat noncompetes as targeted tools rather than default provisions. That means limiting their use to employees with genuine access to trade secrets or customer relationships, narrowing scope in duration, geography, and activity, and documenting the legitimate interests each agreement protects.
This alert is provided for general informational purposes only and does not constitute legal advice. Employers should consult qualified counsel for guidance tailored to their specific workforce, jurisdictions, and business circumstances.