FOS has previously advised clients regarding the Federal Trade Commission’s (FTC) rule (the Rule) barring most noncompete agreements in employment contracts, which was issued in 2024 under the Biden administration. https://foslaw.com/update-ftc-noncompete-ban-blocked-nationwide-by-federal-judge/
After legal challenges, the Eastern District of Pennsylvania preliminarily upheld the Rule, but the Northern District of Texas ruled it unenforceable and issued a nationwide ban on its enforcement. Both decisions are currently on appeal to the Third and Fifth Circuit Courts of Appeals.
With the change in presidential administrations and the appointment of a new FTC chairman, the FTC is reconsidering whether it wants to retain or withdraw the Rule. Recently, for example, current FTC Chairman Andrew Ferguson publicly took the position that the FTC may need to consider whether to continue defending the Rule.
The FTC also sought and obtained a 120-day stay in both appeals to allow it to consider what position it wants to take regarding the Rule and on the appeals. The stay will last until approximately July 2025, at which time the FTC will advise the courts of its position.
The FTC could maintain the Rule, withdraw it, or modify it in some manner. While only time will tell what position the FTC ultimately takes, the Trump administration’s general positions suggest it will likely seek to modify the Rule to lessen its application or withdraw the Rule altogether.
If the Rule is withdrawn, then noncompetes will once again be allowed in many employment contexts. State statutes and judicial decisions regarding the validity and enforcement of noncompete agreements, including Wis. Stat. § 103.465, will remain in effect and govern enforcement.
FOS will continue to monitor these proceedings and other employment-related issues. If you have any questions regarding the Rule or employment matters, contact your FOS attorney.
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