The Federal Trade Commission (FTC) has withdrawn its notices of appeal in cases before the Fifth and Eleventh Circuits that involved challenges to its proposed rule to ban most employee non-compete agreements. That FTC rule, issued under former FTC Chair Lina Khan in April 2024, was struck down by federal district courts in Texas and Florida before ever taking effect. Withdrawing its appeals leaves those adverse district court decisions in force and returns US antitrust scrutiny of employee non-compete agreements to the pre-existing case-by-case review.

Notably, on the very same day that it withdrew its appeals, the FTC filed a complaint challenging a large US employer’s restrictive non-compete agreements with nearly 1,800 employees. Those non-compete agreements allegedly prohibited the employees from working in the same industry nationwide for one year after they left the company’s employ. Under the proposed consent order, the company must cease enforcing its existing employee non-compete agreements, notify employees they are no longer bound by the agreement, and avoid imposing such restrictions in the future, with narrow exceptions. The FTC leadership stressed that the action illustrates the agency’s ongoing focus on anticompetitive labor practices.

Separately, on the previous day, the FTC announced a new public inquiry into the prevalence and effects of employee non-compete agreements.

Link to Takeaway Takeaway

The FTC’s new public inquiry into employee non-compete agreements and its announced challenge indicate that the withdrawal of its appeals does not mean that the FTC is abandoning scrutiny of employee non-compete agreements. Companies should continue to monitor enforcement of terms in their existing employee non-compete agreements and carefully consider the scope of any new restrictions they intend to impose. Labor issues remain an enforcement priority for the FTC—meaning the scope and parameters of employee non-compete agreements remain an important part of any antitrust compliance reviews.

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