Ban Non-Compete Agreements

Approximately 30 million U.S. workers, or roughly 18 percent of the U.S. workforce, are bound by a non-compete agreement, including 14 percent of workers earning less than $40,000 per year. The Federal Trade Commission’s Non-Compete Clause Rule (16 CFR Part 910), published at 89 Fed. Reg. 38342 on May 7, 2024, would have raised worker earnings by an estimated $400 to $488 per worker per year. The rule was vacated nationwide by the U.S. District Court for the Northern District of Texas in Ryan, LLC v. FTC on August 20, 2024, and the Commission acceded to the vacatur in September 2025.

What non-competes do

A non-compete agreement is a contract clause in which a worker agrees, as a condition of employment or after employment ends, not to work for a competing employer or start a competing business for a defined period within a defined geography. Enforcement is left to state contract law. In states that enforce them broadly, including Florida, Texas, and Pennsylvania, workers can be sued for accepting work in their occupation after termination. In four states — California, North Dakota, Oklahoma, and Minnesota — non-competes in employment are void as a matter of state law.

Treasury Department analysis published in 2016 found that 14 percent of workers earning less than $40,000 per year, including janitors, sandwich-shop employees, hairstylists, and security guards, were covered by a non-compete. Approximately one third of workers presented with a non-compete first see it after they have already accepted the job; only about 10 percent negotiate over the terms (Starr, Prescott, and Bishara, 2021). The May 2023 Government Accountability Office report (GAO-23-103785) concluded that non-competes restrict job mobility and may suppress wages even for workers not subject to them, by reducing competitive bidding for labor in affected occupations.

The statute

The Federal Trade Commission’s Non-Compete Clause Rule (16 CFR Part 910) was approved on April 23, 2024 by a 3-2 vote and published at 89 Fed. Reg. 38342 on May 7, 2024. It was vacated nationwide by the U.S. District Court for the Northern District of Texas on August 20, 2024 in Ryan, LLC v. FTC, on the ground that the FTC lacks authority under the FTC Act to promulgate substantive rules of competition. The Commission filed an appeal in the Fifth Circuit in January 2025 and dismissed it in September 2025, accepting the vacatur.

The Workforce Mobility Act of 2025 (S. 2031, 119th Congress) provides the statutory vehicle. Introduced June 12, 2025 by Senators Murphy, Young, Kaine, and Cramer, the bill would prohibit non-compete agreements as a matter of federal law. The bill contains the following provisions:

• Prohibits any person from entering, enforcing, or attempting to enforce a non-compete agreement with a worker or contractor in or affecting commerce. Existing non-competes have no force or effect.
• Reserves a narrow exception for non-competes executed in connection with the sale of a business or the dissolution of a partnership, with non-competes for owners and senior executives in those contexts limited to one year.
• Preserves trade-secret protection under the Defend Trade Secrets Act of 2016 and state trade-secret law, and preserves confidentiality agreements that protect such information.
• Treats violations as unfair or deceptive acts under Section 5 of the FTC Act and assigns concurrent enforcement authority to the Federal Trade Commission, the Secretary of Labor, and state attorneys general.
• Authorizes the Secretary of Labor to investigate violations and bring civil actions in district court for legal or equitable relief on behalf of aggrieved workers, with a four-year statute of limitations.
• Requires every employer to post notice of the prohibition in a conspicuous place on the worksite or in the systems through which employment notices are customarily distributed.

Precedent

California Business and Professions Code § 16600, originally enacted in 1872 as Civil Code § 1673, provides that any contract restraining a person from engaging in a lawful profession, trade, or business is void to that extent. The statute has remained substantively unchanged for more than 150 years; California Senate Bill 699 and Assembly Bill 1076, both effective January 1, 2024, added civil enforcement and employer notice obligations. North Dakota and Oklahoma adopted parallel statutes in the late nineteenth century. Minnesota enacted a complete prohibition effective July 1, 2023 (Minn. Stat. § 181.988). Washington state enacted a complete prohibition under Engrossed Substitute House Bill 1155, signed March 23, 2026.

Massachusetts enacted the Massachusetts Noncompetition Agreement Act in 2018 (Mass. Gen. Laws ch. 149, § 24L), capping non-compete duration at 12 months and requiring garden-leave compensation at 50 percent of base salary during the restricted period. Oregon, Colorado, Illinois, Maine, Maryland, New Hampshire, Rhode Island, Virginia, and Washington, D.C. set wage thresholds below which non-competes are void; in Oregon the 2026 threshold is $119,541. Treasury Department analysis found that states enforcing non-competes broadly had average wages for middle-aged workers approximately 10 percent lower than states that did not. The Federal Trade Commission, drawing on the same body of research, projected that a national prohibition would increase the average worker’s earnings by approximately $524 per year and produce approximately 8,500 additional new businesses formed annually.

First 100 days

Day one. The Department of Labor and the Federal Trade Commission issue joint guidance stating that non-competes covering low-wage and middle-wage workers are presumptively unfair labor practices under existing federal authority. The National Labor Relations Board General Counsel reissues the 2023 memorandum identifying non-compete clauses as interfering with Section 7 rights under the National Labor Relations Act.

Day thirty. The Department of Labor opens a public docket for worker complaints about non-compete enforcement and prioritizes investigations in the industries that the FTC’s 2024 rulemaking record identified as the largest sources of complaints, including health care, broadcasting, security services, and personal-care services. The Department of Justice Antitrust Division coordinates with state attorneys general on parallel state enforcement.

Day ninety. The President signs the Workforce Mobility Act of 2025 into law. The FTC and the Secretary of Labor jointly issue implementing regulations within the 18-month window provided by the statute. Companion appropriations restore FTC competition-enforcement staffing and fund the Department of Labor’s new investigative authority.

Effect of the prohibition

A statutory prohibition removes non-compete clauses from new employment contracts and renders existing ones unenforceable. Workers whose employment ends may accept work in their occupation with a competing employer. The sale-of-business and senior-executive exceptions remain available. Trade-secret protection and confidentiality remain available under the Defend Trade Secrets Act of 2016 and state trade-secret law.