FTC Changes Strategy on Noncompete Enforcement
Publications
October 2025
The Trump administration's FTC has abandoned the rule banning noncompete agreements nationwide, but is encouraging antitrust enforcers to bring challenges in court. Whereas Biden-era officials had concluded that only broad rulemaking could meaningfully address non-competes affecting tens of millions of workers. This FTC is instead urging government enforcers at the federal and state level to challenge anticompetitive non-competes under the Sherman Act on a case-by-case basis.
FTC officials are encouraging enforcers to use Section 1 of the Sherman Act to challenge unreasonable noncompete agreements. The case-by-case approach advocated by the FTC faces significant obstacles. Non-competes are vertical agreements between an employee selling labor and employer purchasing it. Vertical agreements are treated far more leniently under US antitrust law than horizontal agreements between competitors. Rather than being deemed illegal per se, these noncompete agreements will be subject to a rule of reason analysis, which requires a balancing of anticompetitive effects against procompetitive rationale. This will make these cases resource-intensive to litigate.
Meanwhile, several states are pursuing their own noncompete restrictions through legislation rather than enforcement. New York's legislature passed a narrowed ban bill awaiting the governor's decision, while New Jersey considers similar proposals. Choice-of-law disputes between states are emerging as a contentious issue, highlighted by litigation over California's prohibition on enforcing out-of-state noncompete clauses.
Given the shifting policy and enforcement posture regarding non-competes, companies with employees in the United States should consult with an antitrust attorney when deciding whether to impose such restrictions in their employment agreements.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Meanwhile, several states are pursuing their own noncompete restrictions through legislation rather than enforcement. New York's legislature passed a narrowed ban bill awaiting the governor's decision, while New Jersey considers similar proposals. Choice-of-law disputes between states are emerging as a contentious issue, highlighted by litigation over California's prohibition on enforcing out-of-state noncompete clauses.
Given the shifting policy and enforcement posture regarding non-competes, companies with employees in the United States should consult with an antitrust attorney when deciding whether to impose such restrictions in their employment agreements.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
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© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
Publications
October 2025
The Trump administration's FTC has abandoned the rule banning noncompete agreements nationwide, but is encouraging antitrust enforcers to bring challenges in court. Whereas Biden-era officials had concluded that only broad rulemaking could meaningfully address non-competes affecting tens of millions of workers. This FTC is instead urging government enforcers at the federal and state level to challenge anticompetitive non-competes under the Sherman Act on a case-by-case basis.
FTC officials are encouraging enforcers to use Section 1 of the Sherman Act to challenge unreasonable noncompete agreements. The case-by-case approach advocated by the FTC faces significant obstacles. Non-competes are vertical agreements between an employee selling labor and employer purchasing it. Vertical agreements are treated far more leniently under US antitrust law than horizontal agreements between competitors. Rather than being deemed illegal per se, these noncompete agreements will be subject to a rule of reason analysis, which requires a balancing of anticompetitive effects against procompetitive rationale. This will make these cases resource-intensive to litigate.
Meanwhile, several states are pursuing their own noncompete restrictions through legislation rather than enforcement. New York's legislature passed a narrowed ban bill awaiting the governor's decision, while New Jersey considers similar proposals. Choice-of-law disputes between states are emerging as a contentious issue, highlighted by litigation over California's prohibition on enforcing out-of-state noncompete clauses.
Given the shifting policy and enforcement posture regarding non-competes, companies with employees in the United States should consult with an antitrust attorney when deciding whether to impose such restrictions in their employment agreements.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Meanwhile, several states are pursuing their own noncompete restrictions through legislation rather than enforcement. New York's legislature passed a narrowed ban bill awaiting the governor's decision, while New Jersey considers similar proposals. Choice-of-law disputes between states are emerging as a contentious issue, highlighted by litigation over California's prohibition on enforcing out-of-state noncompete clauses.
Given the shifting policy and enforcement posture regarding non-competes, companies with employees in the United States should consult with an antitrust attorney when deciding whether to impose such restrictions in their employment agreements.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Related Articles
Related Capabilities
© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
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