Trump FTC Moves to Stop Defending Worker Noncompete Rule

The Federal Trade Commission will stop pursuing appeals of court decisions that blocked a near-total ban on worker noncompete agreements, burying the Biden administration’s effort to invalidate such contracts.

The FTC moved to voluntarily dismiss cases centered on the sweeping labor regulation, according to motions filed Friday in two separate appeals courts. It marks the latest instance of new Republican FTC leadership reversing a litigation stance of its Democratic predecessor.

The Biden-era FTC adopted the noncompete rule in 2024, triggering a legal challenge that led to a Texas district court vacating the rule on a nationwide basis.

The rule would have barred the use of most noncompete contracts, which generally place restrictions on workers’ ability to leave jobs within their industry. Roughly one in five workers in the US are subject to a noncompete agreement, according to agency estimates.

FTC Chairman Andrew Ferguson, a Republican commissioner at the time of the vote, dissented, arguing the regulation flouted the FTC’s rulemaking authorities granted by Congress.

The US Chamber of Commerce and Ryan LLC, a Texas-based tax firm, echoed those arguments in a lawsuit that challenged the rule. Judge Ada Brown of the US District Court for the Northern District of Texas last August set aside the rule on a nationwide basis after agreeing with those claims.

The Supreme Court in a June decision curbed judges’ power to make such rulings.

The FTC in January appealed the decision at the US Court of Appeals for the Fifth Circuit. It also appealed to the Eleventh Circuit a separate court decision that said the FTC lacked clear congressional authorization to adopt the rule under the US Supreme Court’s “major questions” doctrine.

Former FTC Chair Lina Khan argued the noncompete ban fell squarely within the FTC’s mandate to prevent the use of unfair methods of competition.

When the rule was adopted, she cited the more than 25,000 public comments the agency received supporting the rule, saying that underscored “a basic reality: robbing people of their economic liberty also robs them of all sorts of other freedoms, chilling speech, infringing on religious practice, and impeding people’s right to organize.”

The move by the FTC comes after the Eighth Circuit on July 8 vacated a rule requiring businesses to make it simple for customers to cancel recurring memberships, in another blow to the regulatory efforts pursued during Khan’s tenure.

The cases are Ryan v. FTC, 5th Cir., 24-10951, 9/5/25 and Properties of the Villages v. FTC, 11th Cir., 24-13102, 9/5/25.