By Ami J. Patel and Stephen S. Zashin*
The legal battle over the FTC’s nationwide non-compete ban has reached a decisive turning point. On September 5, 2025, the FTC dismissed its appeals of two federal court decisions that struck down the FTC’s purported Non-Compete Rule (“Rule”) and announced that it will instead pursue case-by-case enforcement actions.
As mentioned in our previous Alerts, the Federal Trade Commission adopted a rule in April 2024 banning most non-compete agreements. The Rule faced immediate challenges. On August 14, 2024, the U.S. District Court for the Middle District of Florida issued a preliminary injunction in Properties of the Villages Inc. v. FTC, blocking enforcement against a single employer. Days later, on August 20, 2024, the U.S. District Court for the Northern District of Texas went further in Ryan LLC v. FTC, holding that the FTC lacked statutory authority and setting aside the Rule nationwide. The FTC appealed both rulings to the Eleventh Circuit and Fifth Circuit.
In January 2025, Andrew Ferguson was appointed as FTC Chairman, shifting the agency’s posture toward the Rule. On March 7, 2025, the FTC asked the Fifth and Eleventh Circuits to hold its appeals in abeyance for 120 days. Ferguson, who dissented when the FTC first adopted the Rule in April 2024, reiterated that the Rule was unlawful.
The FTC’s shift is now seemingly finalized, as on September 5,2025, the FTC voluntarily dismissed its appeals in Ryan LLC v. FTC and Properties of the Villages Inc. v. FTC, abandoning its defense of the nationwide non-compete ban. Chairman Andrew Ferguson confirmed that the FTC would not continue “tilting at windmills” and instead will target non-competes through case-by-case enforcement. The agency pointed to its recent settlement with Gateway Services Inc., which barred enforcement of non-competes against 1,800 workers, and launched a request for public input to identify additional practices for investigation. Democratic Commissioner Rebecca Kelly Slaughter dissented, criticizing the majority for discarding a rule supported by more than 25,000 public comments.
Employers should not view the dismissal of these appeals as the complete end of FTC scrutiny—but close. The Commission has made clear that it will continue to challenge non-compete agreements on a case-by-case basis. At the same time, some state-level restrictions continue to expand. Employers should take this moment to review their restrictive covenants, confirm they are narrowly tailored to protect legitimate business interests, and ensure they remain defensible under state law. Zashin & Rich stands ready to help employers evaluate and strengthen their agreements in this evolving legal landscape.
*Ami J. Patel is Z&R’s Practice Leader for Trade Secrets/Non-competes. She works extensively in trade secret and restrictive covenant litigation. Stephen Zashin is Z&R’s Managing Partner and also has worked extensively representing clients in trade secret and restrictive covenant litigation. For more information on matters concerning the FTC Rule or non-compete agreements generally, contact Ami J. Patel (ajp@zrlaw.com) or Stephen S. Zashin (ssz@zrlaw.com) via email or by phone at 216.696.4441.
