FTC Nationwide noncompete ban abandoned, but enforcement risks remain
Key Takeaways
The FTC has abandoned its nationwide noncompete ban after dismissing appeals in pending cases.
The agency is shifting to case-by-case enforcement under Section 5 of the FTC Act.
Healthcare employers and staffing firms are the first targets, with warning letters already issued.
Employers should review agreements for necessity, scope, and compliance with state law.
Over-broad or unjustified noncompetes can be a liability, not a safeguard.
On September 5, 2025, the Federal Trade Commission (FTC) officially ended its effort to impose a nationwide ban on noncompetition agreements. By dismissing its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC, the agency confirmed it will not revive the rule that had been struck down by federal courts.
For employers, this means there will be no sweeping federal prohibition. But the FTC has made clear: noncompetes remain very much on its enforcement agenda.
What Changed?
The Noncompete Rule, adopted in April 2024, sought to bar most post-employment restrictions across all industries. After legal challenges blocked the rule, the new Republican-led FTC has abandoned further appeals. Instead of pursuing a blanket ban, the FTC is pivoting to case-by-case enforcement under Section 5 of the FTC Act, which prohibits “unfair methods of competition.”
Warning Letters Begin — Healthcare in Focus
The FTC has already started sending warning letters, with healthcare employers and staffing agencies first in line. According to the agency, noncompetes in the healthcare sector can:
Restrict the mobility of nurses, physicians, and other medical staff.
Limit patient access to care, especially in rural and underserved areas.
The letters emphasize that while some noncompetes may serve legitimate business purposes, many are imposed without justification. The FTC is urging employers to reconsider their use of broad or unnecessary restrictions.
Receiving a warning letter does not mean a violation has occurred. But it does put employers on notice that their practices may face further scrutiny.
What Employers Should Do Now
Although healthcare is the first focus, all employers should expect closer review of restrictive covenants. Practical steps include:
Audit existing agreements – Review whether restrictions are necessary for each role.
Narrow the scope – Ensure geographic and time limits are reasonable and defensible.
Use alternatives – Rely on confidentiality and non-solicitation provisions where appropriate.
Check state law – Many states have their own restrictions, and multistate employers face added complexity.
Plan ahead – Be prepared to discontinue or amend agreements that could be viewed as overbroad.
Bottom Line
The FTC’s nationwide ban is gone, but enforcement pressure is not. Noncompetes that cannot be justified are increasingly a liability. Employers should act now to review their agreements and ensure they are defensible under both federal and state law.
Given the heightened scrutiny around non-compete agreements, now is the time to ensure your contracts can withstand the challenge. To review or discuss any questions or concerns contact our Managing Partner, Tom Shumate.