The FTC’s ban on non-competes is not in effect.
The Federal Trade Commission’s 2024 rule to ban most non-competes was set aside by a federal court, and the FTC dismissed its appeals in September 2025.
The basics for employers.
A plain-English summary. This is general information, not legal advice, and the rules change, so check the current text.
What the Rule Said
The 2024 rule would have banned most new non-competes and made most existing ones unenforceable.
Court Ruling
A federal district court in Texas set the rule aside and barred its enforcement, finding the FTC lacked statutory authority.
FTC Action
On September 5, 2025 the FTC voted to dismiss its appeals and accept the ruling.
How it plays out.
With the rule gone, state law and the contract terms control. For Michigan employers, that means MCL 445.774a.
Employers should still avoid overbroad covenants. A covenant that is unreasonable can be cut back or not enforced, and agencies can still examine specific practices.
Watch for future federal or state action. The rules around restrictive covenants continue to change.
Where this shows up in your plan.
Severance and benefit continuation tied to a covenant are governed by the agreement, the plan and ERISA.
Keep the covenant and benefit terms in step so a change in one does not leave the other behind.
Review form agreements when the law changes.
Setting it up.
Check Your Forms. Confirm covenants are consistent with Michigan law.
Do Not Assume a Ban. No federal ban is in effect.
Watch for Changes. Monitor state and federal developments.
Use Counsel. Have an attorney review the language.
Mistakes to avoid.
Assuming a Federal Ban. The rule is not in effect.
Ignoring State Law. Michigan law still governs.
Overbroad Terms. Unreasonable terms risk being cut back.
Laws and Rules Referenced
FTC, Accession to Vacatur of the Non-Compete Clause Rule — The September 2025 filing.
Michigan Antitrust Reform Act, MCL 445.774a — The Michigan standard.
ERISA section 510, 29 U.S.C. 1140 — Benefit rights.
Quick answers.
Short answers to what employers ask most. This is general information, not legal or tax advice.
Why not?
A federal court set it aside and the FTC dismissed its appeals.
What law applies now?
State law and the contract terms. In Michigan, MCL 445.774a.
Could this change?
Yes, so keep watching.
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