Noncompete Agreements in Limbo

Noncompete Agreements in Limbo: What Employers Need to Know in 2025

If you’ve been following the ongoing legal battles surrounding noncompete agreements, you know this topic has seen plenty of twists and turns over the past few years — and 2025 is shaping up to be no different.

A Quick Recap: The FTC’s Attempt to Ban Noncompetes

Under the Biden administration, the Federal Trade Commission (FTC) proposed a sweeping rule that sought to ban nearly all noncompete agreements nationwide. The goal was to promote worker mobility, wage growth, and competitive labor markets by limiting employers' ability to restrict where former employees can work.

As expected, this rule faced immediate legal challenges in multiple jurisdictions. Several courts ultimately ruled against the FTC, finding the proposed ban invalid. The FTC began appealing those decisions — but before those appeals could be resolved, the 2024 presidential election shifted the landscape.

Where Things Stand in 2025

With President Trump now in office, the FTC has requested a 120-day pause on its appeals to reconsider its position on the proposed noncompete ban. This move signals potential changes in the agency’s approach or a possible withdrawal of the rule altogether.

For employers, this means the future of noncompete agreements remains uncertain at the federal level. It’s a legal issue that continues to evolve — and one that businesses should monitor closely in the months ahead.

State-Level Restrictions Still Apply

While the federal debate continues, it’s important to remember that many states already have laws regulating or restricting the use of noncompete agreements. Some states have banned them outright for certain employee classifications or income levels, while others impose specific limitations on their enforceability.

As a best practice, employers should regularly review their employment agreements to ensure compliance with both state and federal regulations.

Key Takeaways for Employers

• The FTC’s proposed noncompete ban is currently on hold, with appeals paused for 120 days as of early 2025.
• The legal status of noncompete agreements remains in flux at the federal level.
• State laws regulating noncompetes are still in effect — and in some cases, quite restrictive.
• Employers should consult legal counsel before drafting, enforcing, or revising noncompete agreements.

Stay Informed with CTR Payroll | HR

At CTR, we keep a close eye on regulatory updates and employment law changes that impact businesses and HR professionals. We’re here to help you navigate complex compliance issues — so you can stay focused on growing your organization.

✴️Need help with compliance? Contact CTR Payroll | HR today!