The regulatory outlook for noncompete agreements has shifted meaningfully over the past year, and employers who have not revisited their restrictive covenant programs since 2024 should do so now. The Federal Trade Commission's much-publicized nationwide ban on noncompetes, promulgated in 2024, is no longer being pursued. Following the September 2025 decision by Chair Andrew Ferguson to withdraw the appeal, there is currently no federal ban in effect, and the sweeping prohibition that many employers spent significant resources preparing for will not take hold in its original form.
That development, however, is not an invitation to return to pre-2024 practices. The FTC has signaled a clear pivot toward a case-by-case enforcement posture, focusing its attention on noncompetes it views as unreasonable rather than pursuing a blanket prohibition. In practical terms, employers should expect scrutiny of agreements that sweep broadly in scope, duration, or geography, that bind lower-wage workers, or that appear untethered to a legitimate protectable interest. Documentation of the business justification for each restrictive covenant, and thoughtful tailoring to the role at issue, remain the strongest defense against both agency review and private litigation.
At the same time, the center of gravity for enforceability continues to sit with state law, and that patchwork is becoming more complex rather than less. Four states currently enforce full bans on noncompete agreements, and Washington is set to become the fifth when its ban takes effect in 2027. Other jurisdictions continue to refine wage thresholds, notice requirements, industry-specific carve-outs, and choice-of-law limitations. Multistate employers, in particular, should audit their template agreements against the law of each state in which they engage workers, rather than relying on a single national form.
For most organizations, the prudent path forward is a measured review: identify which employees truly warrant restrictive covenants, narrow the scope of those agreements to what is defensible, and consider whether nondisclosure, nonsolicitation, or garden-leave provisions can achieve legitimate protective goals with less enforcement risk.
This article is intended for general informational purposes only and does not constitute legal advice. Employers with questions about their specific restrictive covenant programs should consult qualified counsel for guidance tailored to their circumstances.