FTC’s Recent Ruling Regarding Non-Compete Agreements: Safeguarding Business Interests and State Rights
The Federal Trade Commission announced a nationwide Noncompete Rule in April 2024. That rule is not in effect and is not enforceable. After federal courts blocked the rule, the FTC dismissed its appeals on September 5, 2025.
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Employers and employees should therefore evaluate noncompete agreements under the state and federal law that applies to the particular agreement, industry, and facts. The FTC may still review restrictive practices through case specific enforcement, and state law continues to change.
Current status of the FTC Noncompete Rule
The FTC’s 2024 rule would have broadly restricted new noncompete agreements and required notices concerning many existing agreements. The rule never became effective. The FTC now states that the rule is not in effect and not enforceable.
Read the FTC’s current Noncompete Rule status and its September 2025 announcement dismissing the appeals.
What Michigan businesses should know
Michigan law can permit reasonable noncompete agreements that protect a legitimate competitive business interest and are reasonable in duration, geographic scope, and the type of work restricted. Enforceability depends on the language of the agreement and the surrounding facts. Courts may examine whether a restriction is broader than reasonably necessary.
Noncompete provisions are only one part of a broader protection strategy. Confidentiality agreements, trade secret controls, nonsolicitation provisions, intellectual property assignments, and carefully designed access controls may also protect business interests.
Considerations for employers
- Review existing agreements for a clear and legitimate business purpose.
- Confirm that duration, geography, and restricted activities are appropriately tailored.
- Use current agreements that reflect the employee’s role and access to confidential information.
- Coordinate noncompete terms with confidentiality, trade secret, and nonsolicitation protections.
- Review applicable state law before hiring, terminating, or enforcing an agreement.
Considerations for employees and departing owners
Do not assume that an agreement is automatically valid or automatically invalid. Before accepting a new role, contacting clients, using confidential information, or launching a competing business, review the agreement and obtain advice based on the governing law and the actual facts.
What changed from the original 2024 article
The original article discussed the FTC rule before the litigation was resolved and predicted that the rule would be challenged. The current record is now clear: the nationwide rule is not in effect, the FTC dismissed its appeals, and individual agreements must be assessed under the law that otherwise applies.
Talk with counsel before acting
The legal effect of a restrictive covenant can turn on details that are not visible from the agreement alone. The Private Firm advises business owners, employers, executives, and other parties on drafting, reviewing, negotiating, and enforcing restrictive covenants.
For assistance, contact The Private Firm at 248.781.4500 or info@thefirm.net.
This article provides general information and is not legal advice. Laws and enforcement positions may change.
Reese Serra, Esq.
Admitted in Michigan and multi-state matters across business transactions, corporate structuring, asset protection, and wealth transfer. View Attorney Profile