A noncompete agreement is sometimes part of an employment contract. If the worker signs that contract, they are limited in where they can seek employment after that job ends. They may be banned from working for other local companies in the same industry, for example, or the agreement may state that they cannot work for a direct competitor for a specific amount of time after leaving their job. Companies use these to maintain their workforce, protect intellectual property and for other such reasons.
Early in 2024, the Federal Trade Commission took steps to ban noncompete agreements in most cases. The justification at the time was simply to give workers more mobility. By eliminating most noncompete agreements, this freed them up to take other jobs and positions as they wished, which could theoretically help to increase their wages.
What changed?
However, earlier this year, in 2025, the FTC shifted gears and vacated its previous rule. This means that noncompete agreements are no longer unilaterally banned. Outstanding agreements may still apply, and new agreements can be used in future employment contracts.
It does appear that the FTC is going to look into these on a case-by-case basis. This means there may be some cases where they are still not allowed to be used. But the lifting of the overall ban means that they are something that companies may want to incorporate into their employment contracts moving forward.
It is very important to keep abreast of changes to the law, which can happen quickly. As an employer, make sure you are always aware of your legal options and rights.