Servanda
Regulatory June 24, 2026 7 min read

Where the FTC Non-Compete Rule Stands in 2026

After the Fifth Circuit's stay and the agency's pivot to case-by-case enforcement, employers face a patchwork. Here is what general counsel should be doing now.

By M. Halpern, Head of Legal Research, Servanda

The state of play

The FTC's 2024 final rule purporting to ban most post-employment Non-Competes (16 C.F.R. Part 910) was set aside nationwide on Aug. 20, 2024 by the Northern District of Texas in Ryan, LLC v. FTC, No. 4:24-cv-00986. The Commission appealed to the Fifth Circuit (No. 24-10951) and then voluntarily dismissed that appeal on Sept. 5, 2025, leaving the district-court vacatur in place. As of May 23, 2026 the rule is not in effect. The agency has shifted strategy and now pursues Section 5 enforcement against individual agreements it views as unfair methods of competition, on a fact-specific basis.

For in-house counsel, this means the federal-preemption story you may have planned around in 2024 is gone. State law is back at the center.

What changed for enforcement

Three practical shifts:

  • State-by-state continues to harden. Minnesota, California, North Dakota, and Oklahoma remain effective bans for most employees. New York's bill stalled but is back on the docket. Washington and Colorado have raised income thresholds again.
  • The FTC is targeting outliers, not norms. Recent consent orders focus on low-wage, broad-geography, long-duration restrictions, the kind that were already exposed under most state common law.
  • Federal contractors face new scrutiny. Department of Labor guidance has tightened around covenants in federally funded research relationships.

What we recommend

Treat your Non-Compete portfolio as a living risk register, not a static template:

  1. Inventory every active covenant by state, role, income tier, and effective date.
  2. Re-tier them against current state thresholds and judicial trends; many 2022-era agreements are now functionally unenforceable in their stated form.
  3. For your highest-value protections (executives, lead technologists, R&D managers), pair the Non-Compete with a more durable Non-Solicit and confidentiality framework so you do not depend on a single restrictive lever.

The firms doing this well are not waiting for litigation to discover which of their covenants survive. They are auditing on a rolling cadence and updating the template library at least quarterly.

How Servanda helps

The platform's jurisdiction engine maps each covenant against current state-by-state enforceability tiers and surfaces ones whose effective enforceability has dropped since signature. That gives counsel a prioritized remediation list rather than a binder.