The U.S. government has decided to stop defending a rule created under President Joe Biden that banned certain non-compete agreements for workers. These agreements often prevent employees from joining a competitor or starting a similar business after leaving their jobs. The Justice Department recently asked federal appeals courts in New Orleans and Atlanta to drop appeals against rulings that struck down the rule.
The rule was put in place by the Federal Trade Commission (FTC) in 2024 to limit these agreements. The FTC said they make it harder for workers to change jobs, keep wages low, and reduce competition in the job market. However, the rule faced strong opposition from Republicans and business groups like the U.S. Chamber of Commerce, who argued the FTC did not have the power to impose such broad restrictions.
This shift in the government’s stance came after Andrew Ferguson, the current FTC Chairman appointed by former President Donald Trump, announced a review of the rule earlier this year. During Trump’s earlier term, his administration took the position that non-compete agreements themselves were legal, although some specific parts could be unfair.
By dropping the appeals, the courts won’t get a chance to decide if the FTC can make wide-ranging rules like this one. This is significant since estimates show that over 20% of American workers have signed non-compete contracts.
Despite putting the brakes on defending the Biden-era rule, the FTC remains active on this front. Just last month, it reached a settlement stopping the largest pet cremation company in the U.S. from using broad non-compete agreements against 1,800 workers. The FTC said those agreements blocked new competitors from entering the pet cremation market.
This latest move reflects a major shift in how the government handles non-compete rules and could influence future policies affecting millions of workers.