States Take the Lead on Banning Noncompete Agreements

[Passages]

The FTC will probably stop defending its proposed worker protection on July 10. But action in both red and blue states is heating up.

by David Dayen July 2, 2025

Next week, the Federal Trade Commission faces a critical deadline over whether it will continue to defend a ban on noncompete agreements (that is, employment contracts that prohibit workers from taking job at an employer in the same industry) issued under its former chair Lina Khan. It seems unlikely that new chair Andrew Ferguson will keep the important safeguard for workers’ economic liberties alive.

A Trump-appointed judge in Texas, Ada Brown, set aside the noncompete ban last August, claiming that the FTC lacked the statutory authority to issue it, and that it was “arbitrary and capricious” under the Administrative Procedures Act. Because this was an APA set-aside and not a nationwide injunction, the recent Supreme Court ruling against nationwide injunctions does not actually apply, though many have been skeptical of Judge Brown’s authority to block noncompete agreements nationwide. (That’s especially because a separate suit in Pennsylvania upheld the ban, while another lawsuit in Florida is under appeal.)

The FTC then appealed Judge Brown’s ruling to the Fifth Circuit Court of Appeals, but since the Trump takeover, the agency has not acted since filing a motion in March putting the case in abeyance. That abeyance ends July 10, when Ferguson will have to make a decision.

Ferguson opposed the ban when it was finalized last year, saying that it was “the most extraordinary assertion of authority in the Commission’s history.” None of the Democrats who supported the bill are currently in any position to challenge Ferguson: Donald Trump illegally fired the two remaining Democrats last year, and one of them, Alvaro Bedoya, left to take a new job while he continues to challenge his firing in court.

https://prospect.org/labor/2025-07-02-ftc-noncompete-state-regulation-workers-wages/

[WSHazel]

1. I finally found something about Mandami's platform that I like

Mandami is right with his position on banning non-competes. They are anti-worker and anti-capitalist. They are actually anti-business in that they restrict who businesses can hire. They should be limited to only the highest 1 or 2% of earners, or related to business owners selling a business.

[Oneironaut]

3. Non-compete clauses are mostly bullshit.

They have niche uses in environments where companies want to prevent workers from stealing their designs and forming their own company (or giving it to a competitor). However, they’re really hard to enforce.

Instead, most of them now are used in the food industry and stuff like that to bully staff into staying and accepting abuse, because, it’s either stay and put up with it or struggle to find another job in the same industry. It’s used as a scarlet letter.

Microwaving food and giving it to customers isn’t a trade secret that needs to be protected for 10 years. It’s bullshit this was ever allowed to begin with.

[WSHazel]

4. It is a scarlet letter in every industry

Few employers are going to take the chance that a non-compete is enforceable against their employee, because if the employee loses, the new employer can also have liability.

And they are not quite as unenforceable as people say. It depends on the state. At a minimum, who wants to pay a lawyer $50,000 to hold onto a $50,000/year job?

This is actually one of the biggest anti-worker weapons an employer has. They should be outlawed.

[Silent Type]

5. OK with non-competes for lawyers, doctors, other professionals who are compensated for signing. But not some

poor guy who is just being bullied and treated like dirt.

[WSHazel]

6. Why are you ok with doctors having non-competes enforced on them?

You think someone that has borrowed hundreds of thousands of dollars to become an expert in healing people should have no ability to negotiate their salary?

[Silent Type]

7. Don't think you know what a non-compete is. Usually the doctor can go anywhere outside

a maximum of 50 mile radius of where they were paid not to open an office down the road.

[WSHazel]

8. I know what a non-compete is

And I also don't believe we should be picking and choosing who should have one and who shouldn't beyond the top 1% of wage earners.

Non-competes are as anti-worker a legal structure as exists in the world.