The Federal Non-Compete Ban Is Dead. The Agency That Wrote It Is Still Coming After Non-Competes.

The short answer

The Federal Trade Commission abandoned its defense of the 2024 rule that would have banned nearly all non-competes nationwide, and formally removed the rule from the Code of Federal Regulations effective February 12, 2026. It then began enforcing against non-competes case by case, including consent orders reaching more than eighteen thousand employees at a single company. The existential threat to restrictive covenant programs is gone. A narrower and better-aimed threat replaced it.

What happened, in order

September 4, 2025. The Commission issued a request for information on employer non-compete agreements, with comments due November 3.

September 5, 2025. The Commission voted three to one to dismiss its appeals and accede to vacatur of the rule. The vacatur rested on a holding that the Commission had exceeded its statutory authority.

September 10, 2025. The Chairman issued warning letters to several large healthcare employers and staffing firms, urging review of non-competes covering nurses and physicians.

November 2025. A final consent order against a pet cremation company required it to stop enforcing non-competes covering roughly eighteen hundred employees.

February 12, 2026. The Federal Register document removing the rule from the Code of Federal Regulations published and took effect.

February and June 2026. Consent orders against a building services company over no-hire agreements, and against a pest control company, the latter ending non-compete enforcement against more than eighteen thousand employees.

Our take: the exposure moved from everyone to a specific kind of employer

The instinct after a rule is vacated is to conclude the subject is closed. That instinct is wrong here, and the difference between the rule and what replaced it is the whole point.

The rule was categorical. It would have voided nearly every non-compete for nearly every worker. Its defeat means a Florida employer can build a restrictive covenant program without hedging against a federal ban, including under Florida's own statutory framework and the newer garden leave provisions.

The enforcement is targeted. Look at what the Commission actually charged: blanket covenants applied to rank and file service workers across an entire national workforce, and no-hire agreements between companies. Those are the fact patterns, and they are common in exactly the industries South Florida is full of, including healthcare staffing, building services, pest control and hospitality.

Two points that clients consistently get wrong.

A covenant can be enforceable under Florida law and still be a federal problem. Florida's statute asks whether there is a legitimate business interest and whether the restriction is reasonable in time and area. The Commission's theory is a competition theory under its own statute. Passing the first test does not answer the second.

No-hire and no-poach agreements between companies are within the scope. Many employers do not think of an agreement with a vendor or a competitor not to hire each other's people as a non-compete at all. The consent orders treat that conduct as within reach.

The practical direction is narrow tailoring and role differentiation. A covenant that binds an executive with access to strategy and customer relationships is defensible. The same covenant applied to every hourly employee in a national workforce is the thing the Commission has been buying consent orders about.

We would be candid that this enforcement posture depends on the composition of the Commission and could change. That is an argument for tailoring covenants to what you actually need to protect, which is good practice regardless of who is enforcing.

When to call a lawyer

Before rolling out a covenant across a workforce, before entering any agreement with another company about hiring, and on receipt of any inquiry from the Commission.

Why this is not a do-it-yourself problem

A restrictive covenant program now has to satisfy two different bodies of law with different tests, and passing one does not answer the other. Tailoring covenants by role, drafting them to a legitimate business interest, and keeping employer-to-employer hiring agreements out of the enforcement theory are drafting judgments that require knowing both frameworks. The employers named in the consent orders were not outliers; they were using standard forms across standard workforces.

Talk to us

HDD Law Firm drafts and litigates non-compete and other restrictive covenant agreements, and represents both employers and executives in those disputes. If you are rolling out covenants across a workforce, or you are an executive bound by one, discuss your matter with our attorneys.

Sources

●      FTC, Commission files to accede to vacatur of the Non-Compete Clause Rule (September 5, 2025)

●      Federal Register, removal of the Non-Compete Rule from the CFR (February 12, 2026)

●      FTC non-compete enforcement page

●      FTC, final order prohibiting non-compete enforcement, Gateway Services (November 2025)

Disclaimer

This post discusses publicly reported legal developments for general informational purposes. It is not legal advice, it does not create an attorney client relationship, and it does not reflect the firm's position in any pending matter. Outcomes depend on the specific facts and the governing law of the relevant jurisdiction.