Updated October 3, 2026
The Federal Trade Commission's nationwide Noncompete Rule is not in effect and is not enforceable.
The FTC issued a final rule in April 2024 that would have broadly restricted employers from entering into or enforcing noncompete clauses. Before the rule took effect, a federal district court set it aside on August 20, 2024 and prohibited enforcement. The FTC appealed in October 2024. On September 5, 2025, the Commission voted to dismiss its appeals and accede to the vacatur of the rule.
As a result, the 2024 FTC rule does not create a nationwide ban, does not invalidate existing noncompetes, and does not require employers to send the notices described in the vacated rule.
Noncompetes still require state-by-state review
The rule's vacatur does not mean every noncompete is enforceable. State statutes and case law continue to control many agreements, and the law varies substantially by jurisdiction. Some states broadly prohibit employee noncompetes. Others restrict them based on compensation, occupation, notice, consideration, duration, geographic scope, or the employer's legitimate business interests.
The analysis may depend on where the worker lives and works, the agreement's governing-law and forum provisions, when the agreement was signed, the worker's duties and compensation, and whether the restriction is connected to employment or the sale of a business.
Federal and state antitrust and consumer-protection laws may also apply to particular conduct even without the vacated nationwide rule.
What employers should do
Employers should not rely on the 2024 FTC rule as a statement of current law. They should instead:
Inventory existing noncompete, nonsolicitation, confidentiality, invention-assignment, and related restrictive-covenant agreements.
Identify the states where affected workers live and work.
Review notice, compensation, consideration, and timing requirements before presenting new agreements.
Tailor restrictions to a legitimate protectable interest and avoid unnecessary scope.
Use confidentiality, trade-secret, invention-assignment, and appropriately tailored nonsolicitation protections where they address the actual risk.
Recheck the law before enforcement, termination, hiring from a competitor, or a transaction that depends on restrictive covenants.
What workers and founders should do
A worker should not assume that a noncompete is valid merely because the FTC rule was vacated. A founder hiring from a competitor should not assume the agreement is invalid. The enforceability analysis is fact-specific and often turns on state law, the agreement, the worker's role, and the conduct at issue.
In an acquisition, employment transition, or founder separation, restrictive covenants should be reviewed alongside confidentiality, intellectual-property ownership, equity, and customer or employee solicitation obligations.
Official sources
Noncompete law changes frequently and varies by jurisdiction and context, so a current, fact-specific review remains important.
Frequently asked questions
Is the FTC Noncompete Rule currently enforceable?
No. A federal district court set the rule aside on August 20, 2024, and the FTC dismissed its appeals on September 5, 2025.
Does the vacatur make every noncompete enforceable?
No. State law and the facts of each agreement still determine enforceability, and requirements vary substantially by jurisdiction.
What should employers review now?
Employers should inventory restrictive covenants, identify the states where workers live and work, and review notice, compensation, consideration, scope, and timing requirements before using or enforcing an agreement.
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