The Death of the FTC’s Non-Compete Rule—And the Birth of a New Enforcement Era
September 11, 2025
- Denny P. Major
On September 5, 2025, the Federal Trade Commission (FTC) voluntarily dismissed its appeals of decisions issued by federal courts in Texas and Florida that the FTC’s 2023 proposed rule banning most non-competes was invalid. With this dismissal, the FTC’s 2023 proposed rule banning most non-competes is dead.
However, the FTC has made clear that the death of the 2023 proposed rule does not mean it is done with employee non-competes. Rather, it will shift its focus to enforcement actions. On September 4, the day before the FTC withdrew its appeal, the FTC announced an enforcement action challenging the use of non-compete agreements by pet cremation company Gateway Services, Inc. and a subsidiary (collectively, “Gateway”). Gateway’s non-compete agreements, which affected nearly 1,800 employees, sought to prohibit the employees from working in the pet cremation service industry anywhere in the United States for one year after termination. Along with the complaint, the FTC also filed a proposed consent order (for public comment), which would prohibit Gateway from enforcing its non-compete agreements.
The FTC’s press release regarding the Gateway enforcement came with a message: “the FTC is working hard every day to marshal resources across the agency to uproot unfair and unreasonable employment agreements that drive down wages and reduce job mobility,” states Kelse Moen, Deputy Director of the Bureau of Competition and co-chair of the Joint Labor Task Force. “The Trump-Vance FTC will never stop fighting for American workers. Rest assured: today’s action will not be the last.”
In a statement regarding dismissal of the appeal, Chairman Andrew N. Ferguson, joined by Commissioner Melissa Holyoak, condemned the general ban on non-competes, suggesting that some non-competes are lawful, but stated that “we will continue to enforce the antitrust laws aggressively against noncompete agreements.” He warned that “in the coming days, firms in industries plagued by thickets of noncompete agreements will receive warning letters from me, urging them to consider abandoning those agreements as the Commission prepares investigations and enforcement actions.”
On September 4th, the FTC also issued a “Request for Information Regarding Employer Noncompete Agreements” wherein it invited public comment “to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.” The comments must be submitted by November 3, 2025.
Commissioner Mark R. Meador issued a separate statement to set forth his views on the “general analytical framework” he believes the FTC should apply in evaluating non-compete agreements. He includes a non-exhaustive list of factors he believes the FTC should consider:
The FTC’s press release regarding the Gateway enforcement came with a message: “the FTC is working hard every day to marshal resources across the agency to uproot unfair and unreasonable employment agreements that drive down wages and reduce job mobility,” states Kelse Moen, Deputy Director of the Bureau of Competition and co-chair of the Joint Labor Task Force. “The Trump-Vance FTC will never stop fighting for American workers. Rest assured: today’s action will not be the last.”
In a statement regarding dismissal of the appeal, Chairman Andrew N. Ferguson, joined by Commissioner Melissa Holyoak, condemned the general ban on non-competes, suggesting that some non-competes are lawful, but stated that “we will continue to enforce the antitrust laws aggressively against noncompete agreements.” He warned that “in the coming days, firms in industries plagued by thickets of noncompete agreements will receive warning letters from me, urging them to consider abandoning those agreements as the Commission prepares investigations and enforcement actions.”
On September 4th, the FTC also issued a “Request for Information Regarding Employer Noncompete Agreements” wherein it invited public comment “to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.” The comments must be submitted by November 3, 2025.
Commissioner Mark R. Meador issued a separate statement to set forth his views on the “general analytical framework” he believes the FTC should apply in evaluating non-compete agreements. He includes a non-exhaustive list of factors he believes the FTC should consider:
- Likelihood of “free-riding” behavior by employees/competitors using employer intellectual property and other intangible assets absent a non-compete.
- Availability of less restrictive alternatives to non-competes that can protect free-riding concerns (such as, for example, non-disclosure agreements).
- Scope and duration analysis – the restraint should be no broader in geographic scope, duration, and subject matter than necessary to protect the employer’s legitimate interests.
- Market power – non-competes imposed by companies with market power raise heightened competitive concerns, although market power is not required to challenge a non-compete.
- Evidence of economic effects, such as whether there is widespread use of non-competes across an industry, whether a horizontal agreement among competitors is implicated, and the skill and wage levels of the affected employees.
