The FTC’s federal ban on most new noncompete agreements is not in effect, and the agency cannot enforce it. A federal district court in Texas set the rule aside on August 20, 2024, before its planned September 4 start date. The FTC later dropped its appeals, and in February 2026 removed the rule from its regulations. That outcome concerns the federal FTC rule; it does not determine whether a particular noncompete is valid under state law.
What did the federal judge decide?
On August 20, 2024, the U.S. District Court for the Northern District of Texas entered summary judgment for the plaintiffs in Ryan, LLC v. FTC and set aside the FTC’s Non-Compete Clause Rule. The order blocked enforcement nationwide before the rule’s scheduled effective date. The FTC’s current Noncompete Rule page likewise says a district court order stopped the agency from enforcing it.
The decision addressed the federal rule. It did not declare every private noncompete agreement void, nor did it establish that all such agreements are enforceable.
Is the FTC noncompete ban in effect now?
No. The rule never took effect on September 4, 2024, because the court had already blocked enforcement. The FTC subsequently chose not to continue its appeals. On September 5, 2025, the Commission voted 3–1 to dismiss appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC and to accede to vacatur. The FTC described that vote in its announcement.
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The agency’s December 2025 federal court litigation status report lists dismissal of the Fifth Circuit appeal on September 8, 2025, and the Eleventh Circuit appeal on September 10, 2025. In February 2026, the FTC issued a rulemaking notice removing the rule to conform its regulations to the federal court decisions. The notice is reproduced by Justia.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What does the ruling mean for your noncompete?
The federal rule’s invalidation does not answer whether a specific agreement can be enforced. That question may depend on the state whose law applies, the agreement’s language, and the circumstances in which it was made. The federal decisions discussed here establish the status of the FTC rule—not the outcome of every contract dispute.
If you are deciding whether to sign, challenge, or comply with a noncompete, consult an employment lawyer in the relevant state who can review the agreement and your situation. Do not assume the federal rule automatically cancels your contract or that the ruling makes your contract enforceable.
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