Non-compete agreements have long been a staple in employment contracts, especially in high-skilled industries. These clauses are designed to prevent employees from working for competitors or starting similar businesses for a period after leaving a job. For decades, companies have used them to protect trade secrets, customer relationships, and proprietary information.
But in 2025, the legal ground beneath these clauses is shifting rapidly. The Federal Trade Commission (FTC) has proposed a comprehensive ban on non-compete agreements that could impact millions of workers and employers nationwide. As a result of a non-compete ban, individuals with signed contracts and businesses relying on these clauses are left wondering what the next steps will be.
So, where do things stand now? Are non-compete clauses legal today? And what happens to the agreements already signed? This blog breaks down the current state of the FTC non-compete ban, who it applies to, and what both employees and employers need to know going forward.
What Is the FTC Non-Compete Ban?
In April 2024, the FTC voted to approve a final rule banning nearly all non-compete agreements nationwide. The proposed rule prohibits employers from entering into or enforcing non-compete clauses with most workers. This move represents one of the most aggressive federal interventions in employment law in recent history.
The FTC estimates that eliminating non-compete agreements could lead to 8,500 new businesses per year and raise the average annual wage by $524 per affected worker. These economic benefits underscore the FTC’s motivation to bolster competition and empower workers to seek better opportunities.
The ban targets the long-standing concern that non-competes hinder innovation, limit mobility, and suppress wages. By removing this barrier, the FTC hopes to foster a more dynamic and equitable labor market. This includes enabling employees to use their experience and training freely, without fear of legal consequences from former employers.
Is the Non-Compete Ban Law Yet?
As of July 2025, the FTC’s non-compete ban has been passed but not yet enforced. The rule was initially scheduled to take effect 120 days after its publication in the Federal Register. However, several lawsuits from business advocacy groups and trade organizations have placed the rule’s implementation on hold.
This means that while the FTC non-compete ban is on the books, it is not currently enforceable nationwide. Courts will ultimately decide whether the FTC has the authority to impose such a sweeping rule, and litigation may delay implementation for months or even years.
If the courts uphold the rule, the FTC has limited enforcement power and cannot immediately impose civil penalties. However, businesses that continue to use or enforce non-competes could face civil litigation risks and reputational damage if the ban is eventually upheld.
Until that decision is reached, both employees and employers are left operating in a legal gray area that demands caution, preparedness, and legal guidance.
Who Would the Ban Apply To?
The FTC’s rule aims to protect the vast majority of American workers. If upheld, it would make it illegal for employers to enter into or enforce non-compete agreements with most types of personnel. This includes:
- Full-time and part-time employees
- Independent contractors
- Interns and volunteers
- Gig economy workers
One of the only exceptions to this broad prohibition is for senior executives, defined as individuals earning over $151,164 annually who hold policy-making positions. For this narrow group, existing non-competes may still be enforceable.
Additionally, franchisee-franchisor agreements are excluded from the FTC’s rule. These contracts are governed under different frameworks and will not be affected by the proposed ban.
The Ave Maria School of Law emphasizes the potential impact on the healthcare sector. Non-competes often prevent healthcare professionals from moving freely between employers, especially in underserved areas. Eliminating these clauses could enhance the quality of care, reduce costs, and make it easier for doctors and specialists to practice where they are most needed.
Are Non-Compete Clauses Legal If Signed Before the Ban?
This is the central concern for many employees and employers: Are non-compete clauses legal if they were signed before the rule’s introduction?
If the FTC’s ban is ultimately upheld, it would apply retroactively to most existing non-compete agreements. Employers would be required to:
- Formally notify affected workers that their non-competes are no longer valid.
- Cease the enforcement of those clauses in the future.
However, that future is not guaranteed. Until a final court decision is reached, existing non-compete agreements remain enforceable under state law. That means:
- In states that support non-competes (e.g., Texas and Florida), courts may still enforce them.
- In states that restrict or ban non-competes (e.g., California, North Dakota, Oklahoma), agreements are already limited or void.
Employees should not assume that their contract has been invalidated just because of the proposed rule. If your agreement is still active, you may be legally bound by it, and violating its terms could result in legal consequences.
What Should Employees Do Now?
This is a moment of uncertainty but also an opportunity. Employees who are currently under a non-compete clause should take proactive steps to understand and protect their rights:
- Understand non-compete law. Learn how federal proposals and your state’s laws may affect the enforceability of your agreement.
- Read your contract thoroughly. Make sure you understand what you can and cannot do under your current agreement.
- Consult with an employment attorney before making any moves that could be viewed as competitive or in violation of your agreement.
- Document your communications with your employer or legal team regarding the status of your agreement.
- Don’t take unnecessary risks. Until the ban is enforced, courts may still rule in favor of your former employer.
Non-competes can harm job mobility and economic freedom. Workers who remain bound by these agreements often face restricted access to higher-paying opportunities and reduced bargaining power.
Understanding your agreement now can help you plan your next career move with confidence.
What Should Employers Do?
Employers should treat the FTC ban as a sign of where employment law is heading and prepare accordingly. Here are a few steps to take now:
- Audit your current contracts. Identify all employees, contractors, and executives bound by non-compete agreements.
- Update your policies. Consider replacing non-compete clauses with less restrictive alternatives, such as non-solicitation or confidentiality agreements.
- Monitor litigation closely. Stay informed of updates to the rule’s enforceability.
- Prepare for compliance. Even if the FTC rule is delayed or struck down, similar federal or state-level regulations may follow.
- Consult a non-compete attorney. An experienced attorney can help assess your risk, update your agreements, and ensure your employment practices are compliant with current and emerging laws.
Some non-compete clauses may violate antitrust principles, particularly when they are overly broad or unnecessary. Employers who fail to adapt could face costly legal battles or enforcement actions in the future.
Key Takeaways: Where We Stand Now
- The FTC non-compete ban has been passed but is not yet enforceable due to court challenges.
- If upheld, the ban will make nearly all non-compete agreements, including existing ones, unenforceable.
- Are non-compete clauses legal right now? It depends on your state and the status of your agreement.
- Employees should consult a non-compete attorney before changing jobs or launching a business.
- Employers should proactively adjust contracts and prepare for a regulatory shift.
Whether you’re an employee worried about your next move or a business leader reviewing your workforce policies, now is the time to act.
Why Choose Cantrell Schuette for Non-Compete Legal Advice?
At Cantrell Schuette, we focus on employment law that protects your future. Our team of non-compete attorneys has deep experience reviewing, negotiating, and litigating non-compete agreements. We help:
- Employees determine if their agreements are enforceable and explore options to challenge them.
- Professionals who are changing jobs or launching businesses avoid violating restrictive covenants
- Employers audit and update their contracts to reduce risk and stay compliant
In an evolving legal environment, the wrong move can cost you a career opportunity or open the door to legal liability. At Cantrell Schuette, our deep experience in non-compete law and employee mobility enables us to guide you with precision, professionalism, and a deep understanding of the laws that shape your future. Our recent work reflects the results-focused approach we bring to every client matter.
Ready to Review Your Agreement?
The legal landscape around non-compete agreements is shifting rapidly, and waiting to see how things unfold could put you at a disadvantage. Whether you’re considering a job change, planning to start your own business, or want to understand your rights, this is the time to act. If you’re asking yourself, “Are non-compete clauses legal in my situation?” the most critical step you can take is to consult with a legal professional before making any major career decisions.
At Cantrell Schuette, we provide one-on-one consultations designed to help you understand your agreement and protect your future. Our attorneys will review the terms of your non-compete clause, explain how the FTC’s proposed ban and relevant state laws may apply to your situation, and identify any risks associated with your next move. We’ll give you precise, actionable steps so you can move forward with confidence. Contact Cantrell Schuette today to schedule your confidential consultation and gain the clarity you need.
