Noncompete Agreements Remain Legal, But Don’t Abuse Them

Noncompete agreements seem like zombies nowadays. They seemed to be dead, pursuant to an initially proposed FTC rule. Then they were challenged and mired in legal challenges, and seemed to be dead. Now, coming back from the dead: the FTC has changed its mind and revived the noncompete agreement, saying that it will no longer push courts to overturn the invalidation.

In other words, the FTC will dismiss its attempts to have the ban on noncompetes enforced, paving the way for noncompetes to be allowable once again.

There Will Still be Enforcement

But before you think noncompete agreements are back from the dead, like a zombie, the crackdown on noncompetes is still kind of alive. The FTC has said that they will conduct a crackdown on businesses that use noncompetes in bulk. This, apparently, will be more of a piecemeal , case-by-case enforcement.

The FTC is warning that firms or industries that it says are “plagued by noncompetes” will receive notice from the FTC, asking (well, strongly suggesting) that they cease enforcement of the noncompete agreements.

The original ban never was able to take hold, being immediately challenged during the Biden administration, and with some courts nationally upholding the ban, and others invalidating it.

This led to a split in circuits, where some federal circuits disallowed them and others allowed them. At some point, there would either have to be different laws that applied in different parts of the country when it came to noncompetes, or else the Supreme Court would have had to step in and resolve the conflict.

But it doesn’t appear it will ever need to get to that point, given that the FTC, under the current presidential administration, has backed off and admitted that the ban was not enforceable.

So Are They Completely Legal Now?

So should you start handing out those noncompetes?

You legally can, but be aware that this is likely an issue that may be revisited when, and if, a president of a different political party is in the white house. That could be in 3, 7, or more years, but it’s worth keeping in the back of your mind, before you start having every employee sign a noncompete agreement,  that it is within the realm of possibility that one day, a ban may be in effect again.

Additionally, just because there is no blanket ban on noncompetes doesn’t mean that they can be abused. In fact, the FTC chairman has said that despite the FTC allowing noncompetes to remain in place, it will pursue companies that abuse them, under the FTC’s inherent power and the Sherman Antitrust Act.

In fact, the day before announcing that the FTC would not fight to keep the ban in place, it actually filed a complaint against a company for abusing noncompete agreements with employees.

What’s the current state of the law? Ask us. Call the West Palm Beach business litigation attorneys at Pike & Lustig to help you with your business law problems today.

Sources:

hrdive.com/news/ftc-drops-biden-era-noncompete-ban-promises-continued-enforcement/759539/

ftc.gov/news-events/news/press-releases/2025/09/ftc-takes-action-protect-workers-noncompete-agreements