The Federal Trade Commission has dropped its appeal of a court decision blocking a Biden-era rule that banned most employee noncompete clauses. Instead, it will police unduly restrictive noncompete clauses on a case-by-case basis, the FTC chairman stated.
The FTC withdrew its appeal to the U.S. Court of Appeals for the Fifth Circuit in Ryan, LLC v. FTC on September 5. A federal district court had ruled in August 2024 that the FTC’s noncompete rule is unlawful because the Commission exceeded its authority in issuing it. The rule characterized most noncompete clauses as unfair competition.
Current FTC Chair Andrew Ferguson said the Trump Administration will not defend the untenable rule but instead will protect workers against specific anticompetitive conduct. He cited an FTC settlement that stops Gateway Services from enforcing noncompete agreements that prohibited employees – hourly workers as well as executives – from working in the pet cremation industry anywhere in the United States for one year after leaving the company. Ferguson also said the FTC will urge firms in industries “plagued by thickets of noncompete agreements” to consider abandoning those agreements.