Barely a year after the Federal Trade Commission initially made a rule banning noncompete agreements, the agency has officially reversed course on the matter without it ever having gone into effect.

  • Noncompete clauses are a contractual term between an employer and a worker that blocks the worker from working for a competing employer or starting a competing business, typically within a certain geographic area and period of time after the worker’s employment ends.
  • Under President Joe Biden’s administration in 2024, the FTC, then chaired by Lina Khan, had issued a federal ban on noncompete agreements.
  • A federal judge in Texas would soon strike down the FTC ruling, claiming that the government agency does not have such sweeping authority to make a federal ban of this scope, therefore the rule was never enforced.


The Biden administration appealed the ruling to the 5th Circuit Court of Appeals. But early in his administration, President Donald Trump asked the court for a 120-day pause on the appeal followed by another 60-day pause in July. During that time, a new FTC chair, Andrew Ferguson, was appointed to the agency.

  • The appeal became a moot point because, after reviewing the rule, Ferguson and the FTC decided to vacate the rule banning noncompete agreements, claiming its “illegality was patently obvious” in a statement.


A few individual states have issued their own bans on noncompete clauses, including California, Minnesota, Oklahoma and North Dakota.

Noncompete Agreements In Promo

Had this ruling been enforced, it would have had an undeniable impact on the promotional products industry. In fact, according to FTC statistics, there are few industries that wouldn’t feel the reverberations of a ban on noncompete agreements from a federal level.

  • About 30 million people (nearly 20% of all American workers) are tied to some sort of noncompete agreement, according to estimations by the FTC.
  • Those agreements range from minimum wage employees all the way to C-suite executives.

The actual fairness of a noncompete agreement is up for debate, according to many, and some consider it in poor form to expect employees or contractors to honor such agreements. In 2023, Joshua White – then the head of strategy and general counsel at BAMKO and a member of the PPAI Board of Directors – wrote a column for PPAI Media arguing against noncompete contracts as a practice in promo and predicting it would eventually be banned at the federal level.

“The point here is not to challenge your opinion on noncompetes,” White wrote. “My point is to challenge the way you think about people, culture and the role you play in shaping both.”

Despite Ferguson’s role in dropping the FTC’s rule on banning noncompete agreements after being named the agency’s chair, the government official claims to not be a fan of the agreements himself. “Noncompete agreements can be pernicious,” he wrote in his statement. “They can be, and sometimes are, abused to the effect of severely inhibiting workers’ ability to make a living.”

Instead of a federal ban, Ferguson says that the FTC will use its resources to penalize violators of the Sherman Act which prohibits any activities that limit competition in the marketplace.

  • The FTC is soliciting public input on employer noncompete agreements, their scope, prevalence and effects. Stockholder comments are due by November 3, 2025.
  • For more information on how to make your voice heard, click here.