The Federal Trade Commission has formally eliminated the Non-Compete Clause Rule (16 CFR Part 910) from the Code of Federal Regulations. This procedural step closes the chapter on the agency’s attempted nationwide ban and aligns federal regulations with court rulings that blocked the rule before it could take effect.
A Shift in Direction
The turning point came in August 2024, when a federal court halted the proposed ban in Ryan LLC v. Federal Trade Commission. U.S. District Judge Ada Brown issued a nationwide injunction just days before the rule’s scheduled implementation.
Following that decision, the FTC reassessed its approach. After a public workshop in January 2026, the agency announced it would no longer pursue a sweeping national prohibition. Instead, it would return to enforcing noncompete concerns through targeted, case-by-case actions.
In September 2025, the FTC withdrew its appeals in both Ryan LLC v. FTC and Properties of the Villages v. Federal Trade Commission, effectively ending the broader regulatory effort.
Business advocates, including a coalition led by the U.S. Chamber of Commerce, had argued that a blanket ban would significantly limit employers’ ability to safeguard confidential information, trade secrets, and long-standing client relationships.
Implications for Financial Services Firms
Although the federal rule is no longer in play, compliance obligations remain complex — particularly for industries that routinely rely on restrictive covenants.
State Law Drives Enforcement
Noncompete agreements are primarily governed at the state level, and legislative activity continues to accelerate.
Recent developments include:
- Income-based thresholds limiting enforceability, as seen in Colorado and Washington.
- Profession-specific prohibitions, such as laws passed in Arkansas, Indiana, and Maryland banning noncompetes for physicians and nurses.
- Updated wage standards in states like Colorado, where noncompetes generally apply only to higher earners (currently around $127,000 annually).
- Ongoing refinements to enforceability standards in states including Florida.
As a result, employers must pay close attention to state-specific requirements, which increasingly vary in scope and restrictiveness.
FTC Oversight Continues
Even without a national ban, the FTC retains authority under Section 5 of the FTC Act to challenge noncompete agreements it considers unfair methods of competition.
The agency has signaled that it may focus on agreements that are overly broad, apply to lower-level workers, or extend beyond what is reasonably necessary to protect legitimate business interests.
In late 2025, for example, the FTC finalized a consent order against a large pet cremation company that required the release of roughly 1,800 employees from noncompete agreements deemed anti-competitive. The action underscores that aggressive or expansive provisions may still draw regulatory scrutiny.
Rethinking Protective Strategies
Within financial services — where noncompete, nonsolicitation, and garden leave provisions are common — firms are reevaluating how best to protect sensitive data and client relationships.
Carefully drafted nondisclosure agreements and narrowly tailored nonsolicitation clauses remain central tools. Ensuring these provisions are reasonable in duration, geography, and scope can help mitigate enforcement risk while preserving legitimate business protections.
Moving Forward
The formal removal of the federal noncompete rule does not signal a return to the previous regulatory landscape. Instead, it reflects a shift from broad rulemaking to targeted enforcement and state-driven regulation.
Employers may continue to use noncompete agreements in most jurisdictions, but success now depends on precision and compliance. Reviewing existing agreements, aligning them with evolving state standards, and avoiding unnecessarily broad restrictions will be essential in navigating this changing environment.
In short, while the national ban effort has ended, scrutiny over noncompetes remains — and employers should approach their use thoughtfully and strategically.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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