The FTC has finalised a rule intended to ban most non-compete clauses, arguing that it will increase worker mobility, innovation and business formation.
Legal challenge is expected immediately, and the agency’s authority to make a rule of this scope is the point on which it will be fought.
The business thought
Talent mobility and restrictive covenants are politically and legally contested, and state rules already vary widely. A federal rule does not make that variation go away while it is being litigated.
For anyone hiring across states, the practical position is unchanged for now: the enforceability of what you signed depends on where you are.
The practical watch
Use narrowly tailored confidentiality, invention-assignment and customer-protection terms, with legal advice. Those do the work most employers actually want, and they survive better than a broad non-compete.
For hiring, evaluate enforceability state by state and stop relying on stale template contracts.
Postscript, August 2026. A federal district court stopped enforcement in August 2024, and by September 2025 the FTC was moving to dismiss its appeal. The rule never took effect. The lesson survives the reversal: a finalised rule and a durable one are different things, and headlines rarely distinguish them.
Related reading
- Rates, NI and the corner shop: will Burnham’s small-business promises survive contact with the Treasury?
- The US AI executive order moved AI governance into procurement
- The UK digital-markets regime went live
Source: FTC non-compete rule.