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Yes. On August 20, 2024, a federal judge in Texas ruled that the Federal Trade Commission lacked authority to issue its nationwide Non-Compete Rule and that the rule was arbitrary and capricious. The FTC says the rule is not in effect or enforceable. The ruling concerns the federal rule; it does not automatically void an individual worker’s agreement or settle state noncompete law.
What did the Texas judge decide?
In Ryan, LLC v. FTC, U.S. District Judge Ada Brown granted summary judgment to the plaintiffs and denied the FTC’s cross-motion. Her August 20, 2024 decision held that the agency exceeded its statutory authority by adopting the rule and that the rule was arbitrary and capricious under the Administrative Procedure Act. Read the court’s opinion.
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The judge read Section 6(g) of the FTC Act as not expressly authorizing substantive rules about unfair methods of competition. She viewed it as a “housekeeping” provision for procedural or organizational rules, rather than authority to impose substantive legal obligations. The court also found the rule unreasonably overbroad without a reasonable explanation, describing its approach as one-size-fits-all and lacking an end date.
The FTC argued that Congress authorized it to prevent unfair methods of competition through rulemaking and that its economic analysis supported addressing noncompetes by rule. Judge Brown rejected that position in this case. Her decision was a district-court ruling, not an appellate or Supreme Court decision.
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Is the FTC noncompete ban in effect?
No. The FTC’s rule page says the Non-Compete Rule is not in effect and is not enforceable. The agency’s page records a February 12, 2026 Federal Register notice titled “Revision of the Negative Option Rule, Withdrawal of the CARS Rule, Removal of the Non-Compete Rule To Conform These Rules to Federal Court Decisions.” Check the FTC’s rule status page.
The procedural history matters: the district court entered judgment in August 2024; in September 2025, the FTC announced steps to dismiss its appeals in Ryan and Properties of the Villages v. FTC and to accede to vacatur of the rule. The FTC’s later page lists the 2026 removal notice. These agency announcements and the court judgment should not be confused with a claim about the precise final entries on every appellate docket.
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What was the rule supposed to do?
The FTC announced the final rule on April 23, 2024. It was designed generally to prohibit new worker noncompetes and make most existing agreements unenforceable after the effective date, with different treatment for existing agreements involving senior executives. A district court had already preliminarily enjoined implementation and enforcement as to the named plaintiffs on July 3, 2024, while the case proceeded.
When it announced the rule, the FTC estimated that 30 million workers—nearly one in five Americans—were subject to noncompetes. The agency projected that the rule would produce 2.7% annual growth in new business formation and more than 8,500 additional businesses per year, add $524 to average workers’ annual earnings, lower health care costs by up to $194 billion over a decade, and result in an average 17,000 to 29,000 additional patents annually for ten years. Those were FTC estimates and forecasts in 2024, not findings by Judge Brown or observed outcomes. See the FTC’s 2024 announcement and estimates.
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The agency also cited researchers’ estimate that over 95% of workers with a noncompete already had a nondisclosure agreement. It argued that trade-secret law and NDAs could offer employers alternatives for protecting sensitive information. That was the FTC’s rationale for its rule; it does not establish that any particular NDA is valid or suitable.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Does the ruling mean your noncompete agreement is void?
Not by itself. The decision addressed the FTC’s nationwide rule and the agency’s authority to issue it. Whether a specific agreement can be enforced may depend on the applicable state law, the contract’s wording, the facts, and other legal rules. The ruling does not resolve those individual questions, so do not assume your agreement is void solely because of this case.
If the agreement affects a job change or other financial decision, consider asking an employment lawyer licensed where you work to review the actual contract and circumstances. The FTC’s rule removal also does not mean the agency has stopped all case-specific work involving noncompete or related restraints; its official materials list separate enforcement actions. The FTC’s rule page and related materials distinguish the rule’s status from other agency activity.
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