In April, the Federal Trade Commission announced a nationwide ban on nearly all noncompetes with an effective date of Sept. 4, 2024. The FTC’s announcement immediately put the contractual rights and obligations and recruiting and retention strategies of millions of employers and employees in limbo. Litigation contesting the ban came swiftly and aggressively. Last week, a federal district court in Texas set aside the FTC’s rule and found the ban unlawful. The court’s ruling gives employers a reprieve to continue using noncompetes. But the question remains: Will noncompetes remain a viable business tool in the U.S.?

The Push to Rein In Noncompetes

Noncompetes are contracts that limit an employee’s ability to join or start a business in competition with their current or former employer. Except for California, North Dakota, Oklahoma and Minnesota, every state allows noncompetes, though each state’s noncompete regime differs. For at least the past decade, however, there has been a growing trend to rein in noncompetes.