Yes: the FTC’s Noncompete Rule is not in effect or enforceable. The Northern District of Texas set it aside in August 2024, and the FTC later dismissed its appeals, acceded to vacatur and removed the rule from the Code of Federal Regulations in February 2026. That resolves the status of this particular federal rule—not whether a specific non-compete agreement can be enforced under applicable state law.
What the Texas federal court decided
On August 20, 2024, the U.S. District Court for the Northern District of Texas ruled in Ryan LLC v. FTC. Judge Ada E. Brown granted summary judgment to Ryan LLC and intervening business groups, denied the FTC’s cross-motion and set aside the rule. The court concluded that the FTC had exceeded its statutory authority and that the rule was arbitrary and capricious. Read the court’s opinion and order.
The court rejected limiting its relief to the parties in the case, describing the Administrative Procedure Act’s “set aside” remedy as having nationwide effect. Its order said: “The Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024, or thereafter.” The scheduled date therefore did not mark the start of an enforceable federal ban.
How the rule’s status changed after the ruling
| Date | Event | What it means |
|---|---|---|
| April 23, 2024 | The FTC announced its final rule. | The agency described a planned federal ban; this was not a rule that had yet taken effect. |
| August 20, 2024 | The Northern District of Texas set the rule aside in Ryan LLC v. FTC. | The court said the rule would not be enforced or take effect on September 4, 2024, or later. |
| October 18, 2024 | The FTC’s status page records an appeal of the Texas decision. | The agency initially challenged the ruling. |
| September 5, 2025 | The FTC said the Commission voted 3–1 to dismiss its appeals in Ryan LLC and Properties of the Villages and accede to vacatur. | The agency stopped pursuing those appeals and accepted vacatur. |
| February 12, 2026 | A Federal Register notice removed the rule from 16 CFR part 910. | The regulations were conformed to the court decisions and the FTC’s decision to accede to vacatur. |
The FTC’s current rule-status page says the rule is not in effect and is not enforceable. The FTC’s September 2025 announcement and February 2026 Federal Register notice document the later steps.
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The rule adopted in 2024 was designed to prohibit new non-competes with workers and treat them as an unfair method of competition under Section 5 of the FTC Act. Its definition covered a term or condition of employment that prohibited, penalized or functioned to prevent a worker from seeking or accepting work for another person after leaving a job, or from operating a business after employment. It also covered written or oral workplace policies with that effect.
Existing and future agreements
Under the rule’s proposed operating design, employers generally could not enter into new non-competes with workers, including senior executives. Existing agreements for workers other than senior executives would not have been enforceable under the rule, while certain existing senior-executive agreements could remain in force. The FTC defined a senior executive using both a policy-making-position requirement and annual compensation above $151,164. The rule also described a notice requirement for certain existing agreements.
These were features of the rule as adopted in 2024, not obligations that became an enforceable federal standard. The rule was set aside before its scheduled effective date.
What the ruling does—and does not—tell workers
The decision and later FTC actions settle the status of the FTC’s particular nationwide rule. They do not establish that every employment non-compete is valid or invalid, or resolve how a particular agreement applies under state law. Contract terms and the relevant jurisdiction matter. Anyone deciding whether to sign, challenge or rely on a specific agreement should check current law where they work and consider advice from an employment lawyer licensed in that jurisdiction. The FTC’s rule-status materials do not provide a state-by-state determination.
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Why the FTC supported the rule—and how to read its estimates
When it announced the rule on April 23, 2024, the FTC said it estimated that about 30 million workers—nearly one in five Americans—were subject to non-competes. The agency also projected that the rule could increase new business formation by 2.7% annually, resulting in more than 8,500 additional businesses each year; raise average worker earnings by $524 a year; reduce health-care costs by up to $194 billion over a decade; and produce 17,000 to 29,000 additional patents per year for ten years. These were estimates or projections published by the FTC in 2024, not measured outcomes of an implemented federal ban. The FTC also reported researchers’ estimate that more than 95% of workers with a non-compete already had a nondisclosure agreement; the agency cited that figure in its announcement.
Then-FTC Chair Lina M. Khan framed the policy goal this way: “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.” That is the FTC’s 2024 advocacy for the rule, not a court finding or an observed result. The agency’s announcement also pointed to trade-secret law and nondisclosure agreements as ways to protect sensitive information, and to wages and working conditions as ways employers can compete to retain workers. See the FTC’s April 23, 2024 announcement.
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