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Without its Biden-era champions, the Federal Trade Commission’s Non-Compete Rule is facing its final curtain. With a Republican majority firmly in place, the FTC has abandoned its defence of the rule in the courts, launched its own enforcement actions, and opened a new public inquiry into abuses of employee non-competes. Under Chair Ferguson—who dissented from the sweeping rule issued during the Biden administration—the FTC is expected to favour narrower, case-by-case enforcement. The FTC is not walking away from non-compete challenges, but as with many other aspects of antitrust enforcement, is turning its back on the Biden era.
Last spring, the FTC voted along partisan lines to prohibit virtually all new non-compete agreements and render most existing ones unenforceable by 4 September 2025. The ban was the crescendo of a long-standing, high-profile effort to reshape antitrust policy through rulemaking. Spearheaded by then-Chair Lina Khan, the FTC argued the ban would lift U.S. wages and drive innovation.
The FTC’s authority to pursue such broad regulatory action was contested from the outset. In dissent, FTC Commissioners Ferguson and Holyoak both argued that the rulemaking exceeded the FTC’s powers, with Ferguson describing the ban as “by far the most extraordinary assertion of authority in the Commission’s history.”
The rule was swiftly challenged in court, with the plaintiffs echoing the arguments of the dissenting Commissioners, and the results were anything but harmonious. While one court upheld the rulemaking, other courts rejected the rule, criticizing the FTC’s “one-size-fits-all” approach for failing to account for the legitimate and sometimes pro-competitive aspects of non-compete agreements. This ultimately led to an order blocking the rule, offering relief to plaintiffs nationwide.
Rather than seeking to reconcile the conflicting court opinions, the FTC has decided to spit out the rule. On 5 September 2025, the FTC, voting 3-1 along party lines, dismissed its own appeals defending the non-compete ban. In a joint statement with Commissioner Holyoak, now-Chair Ferguson described the ban’s illegality as “patently obvious,” recalling that both had cautioned colleagues it would not survive judicial scrutiny.
Democratic Commissioner Rebecca Kelly Slaughter’s dissent came during a short window here she was reinstated in her role by an appeals court, after being removed without cause earlier this year. The Supreme Court stayed the order on Monday, allowing her to be removed again. Commissioner Slaughter, in her dissent, expressed disappointment at the withdrawal, emphasizing the substantial analysis underpinning the original ban and cautioning against the risks of a fragmented approach.
Under both Chair Khan and Chair Ferguson, the FTC has been concerned with the potential effects of employee non-competes even as they disagree over how to conduct enforcement. Under then-Chair Lina Khan’s tenure, the FTC sought to address the issue broadly through a novel rules-based approach, arguing that case-by-case enforcement simply could not keep pace with the scale and scope of the problem.
The new leadership remains concerned with the potential anti-competitive effects of non-competes and appears to be hitting new notes that favour enforcement via more targeted steps within individualized adjudication. Now in the majority, the dissenters to the rule vehemently reject rules-based enforcement, but this does not necessarily reflect disagreement on the underlying concern. Chair Ferguson acknowledged that non-competes “can be pernicious” and “severely inhibit workers’ ability to make a living” when abused, while Commissioner Holyoak’s dissent to the initial rule confirmed that she would support robust prosecution of genuinely anti-competitive non-compete agreements on the merits. Commissioner Meador’s recent statement also recognized that non-competes can suppress wages and stifle mobility.
Hinting at what is to come, Chair Ferguson highlighted a recent FTC enforcement action against a pet cremation business which enforced non-competes against workers without individualized consideration of job roles—an example of the case-by-case focus now guiding the FTC’s strategy. With a flurry of warning letters and its new public inquiry, the FTC is looking to extend its approach further. The letters and inquiry indicate that healthcare markets, especially those in rural areas, are squarely in the spotlight.
With the nationwide ban vacated, the FTC is now soliciting public comment to help shape a future “case-by-case” enforcement regime. While the new leadership at the FTC may sound like it is singing a new song, non-competes remain squarely within their enforcement focus. But they plan to do it their way.
Bear in mind that several US states have explicitly prohibited employee non-competes while many others have statutes governing employee non-competes so it is important to confirm the applicable state law.
11 September 2025
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