For decades, non-competition agreements that limit a former employee’s ability to work in his or her chosen field have been met with skepticism by judges and legislators in New Jersey, New York, and across the country. Courts have routinely declared void and unenforceable non-compete provisions they have deemed overly broad, while more and more states and local governments have enacted laws and ordinances that either limit the scope and use of such agreements or prohibit them outright.
Until a few years ago, the battle over non-compete agreements was waged almost exclusively at the state and local levels. But that changed under the Biden administration, which injected the federal government into the fight. Both the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) took the position that almost all existing and future non-competition agreements were void and unenforceable. Most notably, the FTC issued a Final Rule in April 2024 that putatively established a nationwide ban on most non-competes, declaring them an “unfair method of competition” prohibited by Section 5 of the FTC Act.
Unsurprisingly, the FTC’s ban was immediately challenged in court, with litigation resulting in dueling district court rulings as to its validity. Injunctions were entered against the Final Rule’s enforcement in some cases, while other courts held that the FTC acted within its authority when issuing the ban. The FTC subsequently appealed federal court rulings in Texas and Florida that invalidated or enjoined, respectively, the FTC’s non-compete ban.
New Administration Pulls the Plug on National Non-Compete Ban
However, after Election Day 2024 and the arrival of a new administration perceived as more friendly to businesses and hostile to regulation, the federal government’s efforts to ban non-competes nationally were soon put on life support. Now, recent moves by the newly comprised FTC have made it clear: a nationwide non-compete ban is dead.
Specifically, the FTC moved in September 2025 to dismiss its appeals of two district court decisions invalidating the Final Rule. Simultaneously, the commission took steps towards acceding to the vacatur of the non-compete ban.
Despite abandoning a nationwide non-compete ban, the FTC has also indicated, through recent enforcement actions and warning letters, that it will continue to pursue remedies against employers on a case-by-case basis for the unlawful use of post-employment non-competes that violate the FTC Act.
Such FTC efforts are nothing new; therefore, the non-compete landscape has effectively returned to its pre-ban status quo. This means employers will continue to look to applicable state legislation and jurisprudence to determine how to draft, defend, and enforce these agreements, while remaining aware of anti-competitive overreach that could attract unwanted scrutiny from the FTC.
Currently, over 30 states and numerous local jurisdictions have laws or ordinances on the books that limit the enforceability of non-compete agreements or ban them entirely. At the moment, neither New Jersey nor New York is among those jurisdictions, though the latest in a series of unsuccessful bills seeking to ban most non-competes in both states remains pending in their respective legislatures.
With the nationwide non-compete ban now dead and buried, but restrictions on and litigation about the enforceability of such agreements very much alive, this is an opportune time for employers to consult with experienced employment counsel who can review and revise any existing or contemplated non-compete provisions as necessary.
If you have questions regarding the current non-compete state-of-play or have specific concerns regarding your company’s use of non-competition agreements, please contact Barry M. Capp at Ansell.Law.