New Executive Order Signals End of Federal Attempt to Ban Noncompete Agreements

The Trump administration has rescinded the Biden-era executive order that directed the Federal Trade Commission (FTC) and other agencies to adopt regulations that purported to promote competition.

The FTC’s near-total ban on noncompete agreements between employers and employees is among the regulations that were put in place in response to a 2021 executive order. The rule, which was adopted in 2024, has been met by several legal challenges. In August 2024, a federal judge issued a nationwide injunction that prevented the noncompete ban from taking effect. In her opinion, Judge Ada Brown wrote that the FTC had overstepped its authority by crafting a rule that effectively prohibited virtually all noncompete agreements.

While still under the Biden administration, the FTC appealed the ruling to the 5th U.S. Circuit Court of Appeals. However, the Trump administration’s different approach to policy and the appointment of a new FTC chair effectively caused that appeal to be abandoned.

By fully revoking the Biden administration’s executive order, the Trump administration signaled that it does not intend to create a federal policy prohibiting noncompete agreements. Business advocacy groups, including the U.S. Chamber of Commerce, applauded the reversal as a move toward eliminating harmful regulations.

“The success of the American economy is built upon free enterprise,” Sean Heather, senior vice president for antitrust at the U.S. Chamber, said in a statement. “The last administration sought to orchestrate the power of big government to supplant our market-driven economy. By revoking the executive order, President Trump has rightfully chosen vigorous competition that entrusts American consumers to pick winners and losers in the marketplace, not more government bureaucracy.”