Federal Trade Commission presses ‘pause button’ on noncompete cases
March 13, 2025
In motions filed on March 7, the Federal Trade Commission (FTC) asked the Fifth and Eleventh circuits to hold appeals on two lawsuits for 120 days so the agency can reevaluate the rule being questioned in those cases.
The motions both cited the new chairperson of the FTC, Andrew Ferguson, as questioning whether the commission should “continue to defend this rule.”
The rule Ferguson is referring to is an FTC rule issued during the prior administration banning all noncompete agreements.
Noncompete agreements prohibit workers from leaving an employer and going to work for a competing business or launching a competing business of their own.
Rule background
In January 2023, the FTC proposed a rule generally prohibiting employers from imposing noncompete agreements on their workers. In the 15 months that followed, the federal agency received more than 26,000 comments on the proposed rule, with more than 25,000 of those comments supporting the proposed ban. On April 23, 2024, the FTC narrowly voted to approve a final rule banning nearly all noncompete agreements. Ferguson, then an FTC commissioner, voted against the rule.
The rule had been set to go into effect September 4, 2024, but a federal judge for the North District of Texas on August 20, 2024, stopped the rule from taking effect. In Ryan, LLC v. Federal Trade Commission, U.S. District Judge Ada Brown said the FTC, which enforces federal antitrust laws, does not have the authority to ban practices it deems unfair methods of competition by adopting broad rules.
The motions filed on March 7 would pause cases which appeal that decision.
What the FTC rule said
Under the rule in question, employers would have been required to provide notice to current and former workers (other than senior executives) who were bound by an existing noncompete agreement that they would not be enforcing any noncompetes against them.
Key to remember: The Federal Trade Commission has asked federal courts to pause cases questioning its rule banning almost all noncompete agreements for 120 days during which the agency will reevaluate its support of the rule.
March 13, 2025
AuthorJudy Kneiszel
TypeIndustry News
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Related TopicsRecruiting and hiring
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