In April 2024, the Federal Trade Commission (FTC) issued a landmark rule banning most non-compete agreements nationwide. The rule was scheduled to take effect on September 4, 2024, and would have invalidated most existing non-competes—except for those involving senior executives. The FTC framed the rule as essential for enhancing worker mobility and promoting fair competition.

However, the rule has since been stalled.

Where Things Stand Nationally

On August 20, 2024, a federal judge in the Northern District of Texas struck down the FTC’s non-compete ban, ruling that the agency lacked authority to enact such a sweeping regulation. This ruling effectively blocked the rule from taking effect nationwide.

While the FTC appealed the decision, it requested a 120-day pause in March 2025—citing the transition to a new presidential administration and a potential shift in policy priorities. The court granted the stay, setting a deadline of July 21, 2025, for the FTC to determine its next move.

In the meantime, the FTC has remained active on the labor front. In March 2025, it announced the formation of a Joint Labor Task Force to investigate harmful labor market practices, including non-compete agreements.

State-Level Momentum: Spotlight on Tennessee

While the federal rule remains in limbo, states are pushing forward with their own reforms—and Tennessee is now one to watch.

In early 2025, the Tennessee General Assembly introduced House Bill 1034 and Senate Bill 995, aiming to broadly prohibit non-compete agreements for nearly all employees and contractors. If passed, these bills would:

• Invalidate most non-compete clauses, regardless of duration or geographic scope;
• Remove existing carveouts for healthcare professionals;
• Limit the enforceability of non-competes to a narrow category of physicians employed by hospital-affiliated entities.

These bills represent a major shift away from the current Tennessee law, which allows non-competes for certain licensed healthcare providers (e.g., podiatrists, chiropractors, psychologists) if they are limited to two years and a ten-mile radius (or county-based) restriction.

The proposed reforms are currently under consideration, with an effective date of July 1, 2025, if enacted. However, the NFIB and other stakeholders are expected to push for revisions and further study during the summer legislative session.

What This Means for Employers and Workers

• Federally: The FTC’s rule remains blocked. Employers are not yet bound by it, but the agency’s continued focus signals the issue isn’t going away.
• In Tennessee: Employers should prepare for the possibility that most non-competes could soon become unenforceable—especially in the healthcare sector.
• Nationwide: States like Colorado, Indiana, Kentucky, Texas, and now Maryland and Pennsylvania are increasingly limiting non-competes, particularly in healthcare.

The legal landscape surrounding non-compete agreements is changing quickly. Employers should stay informed and review existing employment agreements in light of ongoing developments at both the federal and state levels. Workers—especially in healthcare—should be aware of their rights and any restrictions placed on their professional mobility.

Stay tuned as we approach the critical July dates for both the FTC appeal and Tennessee’s legislative decisions.