The Federal Trade Commission signaled a shift in the agency’s enforcement strategy concerning employer-employee noncompete agreements with several announcements on Sept. 4 and 5, 2025. The FTC stated it will no longer defend a ban on most noncompete agreements issued during the Biden administration, which a federal district court set aside and was the subject of ongoing appeals. This likely spells the end of the noncompete ban.
However, the FTC remains committed to enforcing the antitrust laws against anticompetitive noncompete agreements — which the FTC appears to define as including nonsolicitation and nonrecruitment agreements — on a case-by-case basis. The FTC underscored that commitment by announcing a consent order with an employer that allegedly utilized anticompetitive noncompete agreements. The FTC also issued a request to the general public with a deadline of Nov. 3, 2025, for information on employers that utilize noncompete agreements and the scope and impact of those agreements. Taken together, the announcements indicate that the FTC remains committed to addressing anticompetitive noncompete agreements through case-by-case enforcement, pivoting away from the rule-based approach of the Biden-era FTC.
During the Biden administration, the FTC issued a final rule that purported to ban most noncompete agreements. That rule was challenged, and a federal district court in Texas held the rule unlawful and set it aside, preventing the FTC from enforcing it anywhere in the country. The FTC appealed that district court order and similar orders elsewhere in the country under Biden-era leadership. On Sept. 5, the current leadership of the FTC voted to dismiss its appeals of district court orders that held the final rule unlawful and to “accede to the vacatur” of the final rule. FTC Chairman Andrew Ferguson’s statement explained that “[t]he Rule’s illegality was patently obvious,” and he reiterated his prior dissent from the final rule, in which he and Commissioner Melissa Holyoak “warned our Democrat colleagues at great length that the Rule was unlawful six ways from Sunday.” Commissioner Rebecca Slaughter dissented from the Sept. 5 decision to dismiss the appeals. While other parties or certain states may attempt to defend the rule, the FTC’s announcement that it will no longer defend the noncompete rule on appeal likely spells its end.
However, the FTC’s announcements signal that it still seeks to vigorously enforce the antitrust laws against noncompete agreements through a shift to case-by-case enforcement. The FTC’s request for information reaffirms “the agency’s publicly stated priority of addressing harmful labor market conduct through case-by-case enforcement and public advocacy.” In the announcement of the consent order, Daniel Guarnera, Director of the FTC’s Bureau of Competition, stated that “[w]e will protect workers by enforcing the laws against anticompetitive noncompetes.” In his statement that the FTC would not defend the noncompete rule in the ongoing appeals, Chairman Ferguson stated “noncompete agreements can be pernicious.” This is consistent with the FTC’s February 2025 launch of a Joint Labor Task Force aimed at “rooting out and prosecuting deceptive, unfair, and anticompetitive labor-market practices that harm American workers.”
This focus is noteworthy because the FTC historically has not made regulation of noncompete agreements an enforcement focus. As Chairman Ferguson stated in his June 2024 dissent from the final noncompete rule, the “sum total” of the FTC’s experience enjoining noncompete agreements prior to proposing the rulemaking process consisted of three consent orders announced in January 2023. The FTC’s recent announcements indicate that that may change. It is unclear whether the FTC will focus on traditional noncompete agreements — which prevent workers from seeking certain forms of subsequent employment — or if it will also review as potentially anticompetitive “forfeiture for competition” provisions — in which employees forgo compensation if they subsequently choose to be employed by a competitor.
The FTC framed its request for information as an attempt to better understand the current use of noncompete agreements and to stimulate future enforcement actions. It “encourages members of the public, including current and former employees restricted by noncompete agreements, employers facing hiring difficulties due to a rival’s noncompete agreements, and market participants in the healthcare sector in particular, to share information about the use of noncompete agreements.” The FTC’s request seeks names of employers that utilize noncompete agreements and details about the scope of those agreements and their enforcement practices.
The FTC asked for information responding to 13 questions:
- What is the name of any employer currently known to you to be using employee noncompete agreements?
- What reason, if any, has the employer given for using noncompete agreements?
- For what roles, positions or job functions does the employer use noncompete agreements?
- What are the typical salary ranges of the roles or positions subject to noncompete agreements?
- What are the terms or limitations of the noncompete agreements (such as the duration or geographic scope)?
- Does the employer enforce the noncompete agreements? If so, how?
- Do the noncompete agreements harm current or former employees who take, consider taking or would like to take new jobs? If so, how?
- Do the noncompete agreements limit employees from starting or operating their own businesses? If so, how?
- Do the noncompete agreements make it more difficult for rival employers to hire employees? If so, how?
- Do the noncompete agreements contribute to a loss in innovation? If so, how?
- Are you aware of the employer using nonsolicitation or nonrecruitment agreements that limit former employees from working with the employer’s former customers or former employees? Can you provide examples?
- Have any noncompete agreements covering workers in the healthcare sector affected wages, labor mobility, or the availability, quality, or cost of healthcare services in particular? If so, how?
- Have any noncompete agreements made it more difficult for providers of healthcare services to hire physicians, nurses or other professionals? If so, how?
The request includes further detail on some questions.
Individuals or entities can submit confidential responses via email to the FTC and make public comments that “will be posted on the Internet and made available to the public” on regulations.gov. Based on similar FTC requests for information, the comments will be available for public review on a rolling basis shortly after they are submitted and vetted by the FTC. These requests for information typically elicit responses from industry associations, state and local government entities, interest groups, businesses and individuals.
Employers may wish to monitor responses concerning their employment practices and those of their competitors.
In addition to federal enforcement of the antitrust laws against employee noncompete agreements, employers should also be cognizant of the continuing developments of state laws banning employer-employee noncompete agreements in whole or in part. While certain states may seek to defend the noncompete rule instead of the FTC, the practical response may be more state law development.
McGuireWoods continues to monitor developments and is ready to advise clients on employer-employee noncompete agreements, the public comment process and managing enforcement risk in light of increased FTC scrutiny.
