Legal Update - FTC Non-compete Ban

In a closely watched development, a Texas federal court has struck down the Federal Trade Commission’s (FTC) nationwide ban on non-compete agreements, ruling that the agency exceeded its authority. Here’s what this means for Georgia employers and employees.

In April 2023, in a groundbreaking move, the FTC adopted a rule that would have banned nearly all non-compete agreements nationwide, including those already in effect. The rule was set to take effect on September 4, 2024, and would have impacted millions of workers by eliminating restrictions that prevent them from pursuing new job opportunities.

The FTC justified the ban by arguing that non-competes:

• Stifle innovation and competition
• Reduce wages and job mobility
• Prevent workers from advancing their careers

However, the rule faced immediate legal challenges from states, business groups, and trade associations.

In a significant development, in August 2024, a Texas federal declared the FTC’s non-compete ban unconstitutional, holding that the FTC overstepped its statutory authority. The court reasoned that only Congress - not a federal agency - can make sweeping changes to national labor policy.

The FTC appealed the ruling, but after President Trump’s re-election, the new administration signaled that it may abandon the appeal. On March 7, 2025, the federal government filed a motion to stay proceedings, effectively pausing the case and leaving the FTC rule invalidated.

As a result of the Texas court decision:

• The FTC’s non-compete ban is not in effect.
• State law controls the enforceability of non-compete agreements.
• Employers in states like Georgia can continue to use non-competes within certain limits.

This means Georgia’s Restrictive Covenants Act (O.C.G.A. § 13-8-50 et seq.) remains the controlling law. Under Georgia law, non-competes are enforceable if they are:

• Reasonable in time, territory, and scope, and
• Designed to protect legitimate business interests such as trade secrets, confidential information, or client relationships.

For employers:

You can continue using non-competes in Georgia, provided they are properly drafted. It’s a good time to review existing agreements for compliance with Georgia law, since overbroad or outdated restrictions may be vulnerable to challenge.

For employees:

If you’re asked to sign a non-compete or already bound by one, don’t assume it’s automatically enforceable. Georgia courts carefully scrutinize these agreements, and many can be narrowed - or even invalidated - if they go beyond what the law allows.

The FTC’s proposed ban may never take effect, but pressure for reform continues. Legislators and advocacy groups are calling for limits on non-competes, particularly for lower-wage workers and professionals in technology, healthcare, and sales.

For now, Georgia’s rules remain in place, but the legal landscape could change again depending on future court rulings or Congressional action.

Our attorneys routinely advise employers and employees on drafting, negotiating, and enforcing non-compete and other restrictive covenant agreements in Atlanta and throughout Georgia.

If you have questions about a non-compete agreement - whether you’re an employer seeking to protect your business or an employee unsure of your rights - contact Fidlon Legal today. Our leading Atlanta non-compete attorneys can review your restrictive covenant agreement, assess enforceability, and help you make informed decisions under Georgia law.

Non-compete agreements – Frequently Asked Questions