FTC's Noncompete Ban Is Dead. A Pennsylvania Court Just Made the Paper Trail Official.

FTC's Noncompete Ban Is Dead. A Pennsylvania Court Just Made the Paper Trail Official.

The Federal Trade Commission's rule banning nearly all worker noncompete agreements is formally finished. On November 3, the U.S. District Court for the Eastern District of Pennsylvania entered a stipulated order dismissing the last remaining challenge to the rule — and dismissing the rule itself — closing out a legal fight that had already been decided in the courts but was still sitting on the docket.

The rule, finalized in April 2024, would have voided existing noncompetes for most workers and barred new ones nationwide. It never took effect. In August 2024, Judge Ada Brown of the Northern District of Texas ruled in Ryan LLC v. FTC that the agency lacked substantive rulemaking authority over unfair methods of competition and that the rule was arbitrary and capricious, setting it aside nationwide. The Eleventh Circuit affirmed that decision in August 2025, holding the FTC had no statutory basis to issue the rule.

What was left was a loose end: ATS Tree Services v. FTC, the Pennsylvania case where Judge Kelley Brisbon Hodge had denied a preliminary injunction, reasoning the FTC likely had authority. That preliminary posture never became a final merits ruling, and with the Eleventh Circuit's affirmance the parties moved to dismiss. The November 3 order makes the nationwide vacatur the last word.

The practical upshot: noncompete law in the U.S. remains a state-by-state patchwork, and the FTC's competition toolkit now runs through case-by-case enforcement rather than rulemaking. The agency has continued bringing individual Section 5 actions against restrictive terms, but employers should not expect a federal blanket ban to return soon. Watch whether the FTC signals a narrower rulemaking attempt aimed at specific industries — and whether state legislatures, particularly in the South, keep moving on their own.

Primary sources: ATS Tree Services, LLC v. FTC docket (CourtListener); Ryan LLC v. FTC docket (CourtListener); Non-Compete Clause Rule, 89 Fed. Reg. 38342 (Federal Register)