FTC Signals Intent to Yield on Non-Compete Ban, Citing Legal Challenges
Washington D.C. – The Federal Trade Commission (FTC) has indicated its intention to accede to a vacatur of its recently established rule banning most non-compete clauses for workers across the United States. This development, announced via a press release on September 5, 2025, at 12:00 PM EST, suggests a significant shift in the FTC’s approach following legal challenges to the rule.
The non-compete clause rule, which was finalized earlier this year with the aim of promoting greater worker mobility and fostering competition, has faced considerable opposition from various business groups and industry associations. These entities have argued that the broad prohibition on non-compete agreements would harm businesses, stifle innovation, and potentially lead to increased labor costs.
In its filing, the FTC stated its decision to not oppose a vacatur of the rule. A vacatur, in legal terms, is an order to cancel or annul a previous court judgment or order. In this context, it would effectively set aside the FTC’s non-compete ban, preventing it from taking effect as planned. While the FTC’s press release does not explicitly detail the legal arguments that led to this decision, it is understood that ongoing litigation has played a crucial role. The agency’s acknowledgment of the legal landscape suggests a strategic move to address the challenges and potentially revisit the issue through a different avenue or with modifications.
This announcement marks a notable turn of events, as the FTC had previously championed the rule as a vital step towards a more dynamic and equitable labor market. The agency’s stated goal was to empower workers by removing restrictive covenants that prevent them from seeking new employment opportunities or starting their own businesses. The potential impact of the rule was anticipated to be far-reaching, affecting millions of workers across a wide spectrum of industries.
While the immediate effect of acceding to the vacatur is that the nationwide ban on non-compete clauses will not be implemented as originally intended, the FTC’s statement may signal a commitment to continue exploring avenues to address what it perceives as anticompetitive practices related to employment agreements. It remains to be seen how the agency will proceed from this point, whether through revised rulemaking efforts, targeted enforcement actions, or other regulatory strategies.
The news is likely to be met with a mixed reaction. Employers who had prepared for the implementation of the ban may see this as a reprieve, allowing them to maintain existing contractual terms. Conversely, worker advocacy groups and proponents of the rule may express disappointment, viewing this as a setback in their efforts to enhance worker protections and promote fair competition.
Further details regarding the FTC’s legal reasoning and any potential future actions are expected to emerge as the legal process unfolds. This development underscores the complexities of regulatory rulemaking and the significant influence of judicial review in shaping public policy.
Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule
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