The FTC Non-Compete Ban Is Dead
Hi, I’m Jeremy Eveland. I’m a business attorney licensed in Utah, Nevada, California, and Texas. I help businesses with non-compete agreements and serve as their general outside counsel. If you need legal help with your business, call me at (801) 613-1472 to see if we’re a good fit to work together.
Business owners do not need to assume that non-compete agreements are gone. What they do need to understand is that the legal landscape has shifted away from a single federal rule and back to a state-by-state analysis that is more specific, and often more demanding. The result is that many non-competes may still be enforceable, but only if they are drafted and used correctly. FTC Noncompete Rule Noncompete | FTC
The practical question is no longer whether a nationwide ban controls every contract. The real question is whether your agreements fit the laws that actually govern them today. FTC Noncompete Rule
What happened to the FTC ban
The FTC adopted a sweeping non-compete rule in 2024, but that rule did not become the nationwide standard many employers feared. The FTC’s rule page now reflects that the rule was vacated, and the agency also stated in 2025 that it moved to accede to vacatur of the non-compete rule. In plain English, the broad federal ban is not what currently governs employers. FTC Announces Rule Banning Noncompetes FTC Noncompete Rule Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule
That matters because many business owners were waiting to see whether they would need to rewrite all employment agreements at once. They do not need to do that based on the FTC rule alone. But the disappearance of that broad federal rule does not make existing contracts automatically safe. FTC Noncompete Rule Noncompete | FTC
What controls non-competes now
Today, enforceability is primarily a state-law issue. Some states prohibit non-competes almost entirely, while others allow them only under narrow conditions such as salary thresholds, limited durations, or specific business interests. That creates a patchwork rather than a single national rule. State Noncompete Law Tracker 2026 State Noncompete Salary Threshold Changes
This means a clause that may be defensible in one state can be invalid in another. Even where non-competes are allowed, courts often examine whether the restriction is reasonably necessary to protect trade secrets, goodwill, customer relationships, or specialized training. State Noncompete Law Tracker Beyond the Ban: The FTC's New Path on Noncompetes
For employers, the consequence is straightforward: old boilerplate may be too broad for today’s law. Contract language that looked routine a few years ago may now create unnecessary risk if it ignores newer state restrictions or current judicial standards. Noncompete | FTC State-by-State Restrictive Covenant Litigation in 2026
What employers must do immediately
The first step is to audit current agreements. Employers should identify which employees are subject to non-competes, which states’ laws apply, and whether those provisions still match current legal requirements. This review should include employment agreements, offer letters, contractor agreements, equity documents, and separation agreements. State Noncompete Law Tracker Updated 50-state noncompete chart (January 2026)
The second step is to narrow the toolset. In many cases, businesses should rely more heavily on confidentiality clauses, trade secret protections, non-solicitation provisions where lawful, invention assignment terms, and carefully drafted restrictive covenants. These tools often provide stronger protection than a broad non-compete that may not survive a challenge. Noncompete | FTC FTC Signals Aggressive Case-by-Case Enforcement Action on Noncompete Agreements
The third step is to update contracts proactively. Businesses should not wait for a dispute to discover that a restriction is unenforceable. A contract review now is usually far less expensive than litigation later, especially if the agreement needs to work across multiple jurisdictions. FTC Noncompete Rule State-by-State Restrictive Covenant Litigation in 2026
Why overbroad contracts still create risk
A common mistake is assuming that an unenforceable non-compete is harmless because it can simply be ignored. That is not always true. Overbroad restrictions can still create employee-relations problems, invite legal challenges, and undermine credibility if they are used as intimidation rather than legitimate protection. FTC Signals Aggressive Case-by-Case Enforcement Action on Noncompete Agreements
There is also a reputational cost. Employees and recruiters increasingly recognize when a company is using outdated restrictive covenants. Businesses that rely on overly aggressive language may look less trustworthy and less adaptable, even if they never end up in court. Beyond the Ban: The FTC's New Path on Noncompetes FTC Clarifies Stance on Non-Compete Agreements
In addition, regulators and courts are paying close attention to agreements that appear excessive. Employers should expect closer scrutiny when a clause seems designed to block ordinary mobility rather than protect a real business interest. FTC Signals Aggressive Case-by-Case Enforcement Action on Noncompete Agreements FTC Clarifies Stance on Non-Compete Agreements
What actually works now
The strongest modern contract strategy is not “ban everything” or “draft everything broadly.” It is precision. Employers should identify the exact business interest they are protecting and match the restriction to that interest. Noncompete | FTC State Noncompete Law Tracker
For example, if the real concern is customer poaching, a narrowly tailored non-solicitation clause may be more effective than a sweeping non-compete. If the concern is sensitive internal information, a detailed confidentiality and trade secret regime may offer better protection. If the employee is in a position of unique trust or specialized access, a carefully limited non-compete may still be viable depending on the state. Updated 50-state noncompete chart (January 2026) State-by-State Restrictive Covenant Litigation in 2026
This approach is more defensible because it shows restraint. Courts are generally more likely to uphold restrictions that are tied to an actual business risk rather than generic fear of competition. FTC Noncompete Rule Beyond the Ban: The FTC's New Path on Noncompetes
How business owners should think about compliance
The best mindset is not panic, but maintenance. Restrictive covenants are not “set it and forget it” documents anymore. They should be reviewed regularly, just like employment policies, handbooks, and compliance procedures. State Noncompete Law Tracker 2026 State Noncompete Salary Threshold Changes
A good compliance review should answer these questions: Which states are involved? Does the agreement use current law and current definitions? Is the restriction narrower than it needs to be? Are confidentiality and trade secret protections strong enough on their own? Are the company’s signed agreements consistent across employees and contractors? Updated 50-state noncompete chart (January 2026) Noncompete | FTC
If the answer to any of those is uncertain, the contract may need revision. That review is especially important for employers with remote workers or operations across multiple states, where one bad clause can create avoidable risk. State Noncompete Law Tracker State-by-State Restrictive Covenant Litigation in 2026
The business case for updating now
Updating agreements now helps employers do more than avoid legal problems. It also improves clarity inside the business. Employees understand expectations better when restrictions are written in plain, current language, and managers can enforce policies more consistently when documents are aligned. FTC Signals Aggressive Case-by-Case Enforcement Action on Noncompete Agreements
That is especially important in industries where relationships and information are central to value. Professional services firms, agencies, consultancies, and other relationship-driven businesses often depend on trust, continuity, and protected knowledge. Those interests can still be safeguarded, but the legal tools must be selected carefully. Beyond the Ban: The FTC's New Path on Noncompetes FTC Clarifies Stance on Non-Compete Agreements
Next Steps For Non-Compete Agreements
The end of the FTC’s broad rule did not make restrictive covenant law simple. It made it more localized, more technical, and more dependent on careful drafting. For business owners, that means the safest path is to review current agreements, remove stale language, and replace assumption with strategy. FTC Noncompete Rule FTC Ban of Non-Compete Agreements Is Dead
Strong protection is still possible. It just has to be built on enforceable terms, current law, and a clear business purpose. Noncompete | FTC FTC Signals Aggressive Case-by-Case Enforcement Action on Noncompete Agreements
Jeremy Eveland
17 North State Street
Lindon UT 84042
(801) 613-1472