Effective February 12, 2026, the Federal Trade Commission has formally removed its noncompete rule from the Code of Federal Regulations. The action brings the CFR into alignment with federal court decisions that struck down the agency's categorical prohibition, including Ryan LLC v. FTC. While the rescission is largely a technical conforming step, it definitively closes the chapter on the sweeping federal ban that would have voided most existing noncompete agreements across the country.
The regulatory shift reflects a broader change in enforcement philosophy under FTC Chair Andrew Ferguson. Rather than pursuing a one-size-fits-all national rule, the Commission has signaled that it will scrutinize restrictive covenants on a case-by-case basis. This means that although employers no longer face a categorical federal prohibition, individual noncompete agreements remain vulnerable to challenge as unfair methods of competition under Section 5 of the FTC Act. Agreements that appear overly broad, that bind lower-wage workers, or that reach beyond legitimate protectable interests may draw particular scrutiny.
For employers, the practical upshot is that state law once again occupies the primary field for drafting and enforcing noncompetes. Jurisdictions continue to diverge significantly, with some states imposing strict wage thresholds, notice requirements, or outright bans in specified industries, while others apply traditional reasonableness standards focused on scope, duration, and geography. A restrictive covenant program that was calibrated in anticipation of the federal rule should now be reassessed against the applicable state framework in each jurisdiction where the employer operates.
Employers should also remain mindful that the FTC's retreat from a categorical ban is not a green light. Fact-specific review may still target agreements that sweep in workers without access to trade secrets, that impose durations disproportionate to the employer's legitimate interests, or that are used as a matter of routine rather than tailored to individual roles. Prudent practice includes documenting the business justification for each agreement, differentiating terms by worker classification, and revisiting form templates on a regular schedule.
This article provides general information only and is not legal advice. Employers and workers with questions about specific noncompete agreements or their enforceability should consult qualified counsel for guidance tailored to their circumstances.