FTC Withdraws Appeal of Cases Vacating Regulation Banning Non-Compete Clauses
On September 5, the FTC voted to withdraw its appeals in the Fifth and Eleventh Circuits of cases in which District Courts vacated the recently enacted regulation banning non-compete clauses.
The Rule designated employers entering or attempting to enter or enforce non-compete clauses as an unfair method of competition except where the employee was a senior executive in policy-making positions with annualized compensation of at least $151,164. It also required employers to provide notice whenever offering non-competes to employees that they were non-enforceable. The Rule was scheduled to go into effect in September 2024 but never did because of numerous U.S. District Court preliminary injunctions.
The first injunction was issued in July 2024 by the Northern District of Texas, but, later that month, the Eastern District of Pennsylvania denied a similar motion for a preliminary injunction in another case, upholding the FTC’s regulatory authority to enact the Rule. On August 15, 2024, the Middle District of Florida also issued a preliminary injunction delaying the Rule’s effective date and, on August 20, 2024, the Northern District of Texas, issued a nationwide injunction. The FTC appealed the Florida and Texas decisions while President Biden, whose administration enacted the Rule, was in office. While the appeals were pending, President Trump’s administration sought multiple 60-day stays to allow the FTC to reconsider the Rule.
On September 5, 2025, Chairman Andrew Ferguson, Commissioner Melissa Holyoak, and Commissioner Mark Meader voted to withdraw the appeals and accede to vacatur, with Commissioner Rebecca Kelly Slaughter dissenting. Ferguson and Holyoak, who both dissented from the Rule when it was first enacted, issued a joint statement noting that government regulation of non-competes can and should continue, as it previously had, at the state level. Similarly, Commissioner Meader’s concurrence expressed a preference for a more “contextual” analysis, subjecting non-competes to a rebuttable presumption in employees’ favor. The public has the opportunity to weigh in on non-compete regulations and enforcement; the FTC launched a Request for Information to gather more information about employers using non-competes and will accept public comments until 11:59 p.m. ET on November 3, 2025.
