Trump Administration Extinguishes Federal Noncompete Rule

On September 5, 2025, the Trump Administration abandoned the defense of the federal noncompete ban, thereby killing the rule. The rule, if implemented, would have banned most noncompete agreements from employment contracts. Noncompete agreements for new employees would have been prohibited and existing noncompete agreements would have been allowed only for senior executives. The rule never took effect as judges in two federal districts blocked implementation after concluding that the Federal Trade Commission (FTC), the rule’s issuer, lacked the authority to issue such a broad rule.

The Department of Justice filed documents in federal courts in Atlanta and New Orleans to effectuate abandonment of the rule’s defense. The move was expected considering criticism of the rule leveled by new FTC Chair Andrew Ferguson, a Trump appointee, and a review of the rule by the new administration. The FTC enacted the rule in 2024 during the Biden Administration. 

As a result, noncompete agreements will continue to be permitted unless restricted by state-enacted provisions. In Pennsylvania, the PAMED-supported Act 74 of 2024 limits noncompete agreements for physicians to a maximum duration of one year. In addition to physicians, Act 74 will also apply to certified registered nurse anesthetists, certified registered nurse practitioners and physician assistants.