FTC Withdraws Non-Compete Ban

On September 5, 2025, the Federal Trade Commission (FTC) officially dropped its appeal in Ryan, LLC v. FTC, abandoning its defense of the agency’s 2024 rule that sought to ban nearly all non-compete agreements nationwide. The withdrawal of the appeal effectively ends the current effort to implement the rule, which had been blocked in 2024 when the U.S. District Court for the Northern District of Texas first enjoined the rule on July 3, 2024, and then set it aside on August 20, 2024.¹ This decision confirms that any federal prohibition on non-competes will remain on hold, unless or until future regulatory or legislative action is taken.

In the months following the rule’s issuance, we analyzed its sweeping scope and likely legal hurdles in Understanding the FTC’s Ban on Non-Competes. We also discussed the Texas court’s decision to enjoin the rule before its effective date in Texas Businesses Escape FTC’s Non-Compete Ban.

Although the FTC has stepped back from a blanket prohibition, it has not abandoned oversight. The agency issued a Request for Information (RFI) on September 4, 2025, seeking public input on the use and effects of non-competes, with comments due by November.² This indicates a pivot toward targeted enforcement under the FTC’s existing authority in Section 5 of the FTC Act.

Meanwhile, Texas has advanced its own restrictions. Senate Bill 1318, effective September 1, 2025, narrows the scope of non-competes for physicians and extends similar rules to other health care professionals, including dentists, nurses, and physician assistants.³ Under the statute, such agreements are limited to one year in duration, a five-mile geographic scope, and buyout provisions capped at the practitioner’s total annual salary. The law also voids a physician’s covenant if they are involuntarily terminated without good cause.³

Takeaway

For employers, the FTC’s withdrawal removes the immediate threat of a nationwide ban, but scrutiny remains – both federally and under state law. Businesses should review their agreements for enforceability, pay particular attention to health care contracts in Texas, and anticipate continued regulatory focus on worker mobility and competition.

Sources

1. FTC Press Release, “FTC Drops Appeals in Noncompete Rule Cases,” September 5, 2025; Ryan, LLC v. FTC, U.S. District Court, N.D. Texas (Orders July 3, 2024 and August 20, 2024).
    FTC Release
    Court Opinion – Aug. 20, 2024
   
2. FTC Press Release, “FTC Issues Request for Information on Noncompete Agreements,” September 4, 2025.
    FTC RFI
   
3. Texas Legislature Online, Senate Bill 1318 (2025), enrolled version.
    SB 1318 Text