Last year, the Federal Trade Commission (“FTC”) announced a final rule prohibiting most non-compete agreements throughout the U.S. Meaning employers would generally be prevented from requiring workers to sign contracts limiting their ability to take a new job with a competitor, or start a competing business, after leaving the company.

The rule was quickly challenged and in August, 2024, one federal judge in Texas granted a Motion putting a full stop on the FTC’s sweeping ban. The FTC initially appealed the decision but early last month it withdrew the pending appeals and officially ended its push for a sweeping nationwide ban on non-compete agreements.

This move formally ends the FTC’s efforts to implement a federal, near-total ban on non-competes. Employers can rest assured no nationwide ban is in effect, but it is important to note the FTC’s fight to protect workers’ rights and promote competitive labor markets is far from over.

CASE-BY-CASE ENFORCEMENT

As soon as the FTC withdrew its appeal, it shifted its focus to a case-by-case enforcement strategy under Section 5 of the FTC Act, which prohibits unfair methods of competition.

In a clear signal of heightened scrutiny, the FTC:

1. Took Action on Specific Agreements: Launched an enforcement action against a pet cremation company the FTC believed to be enforcing agreements in violation of the FTC Act, affecting over 1,700 employees;
2. Issued Warnings: Sent a warning letter to several large healthcare employers and staffing firms, advising them to review their non-compete agreements for reasonableness; and
3. Launched a Public Inquiry: Opened a public inquiry to gather information from employees and others regarding the use of non-compete agreements to “shine a light on unfair and anticompetitive agreements.” (Responses are due November 3, 2025.)

This new approach emphasizes the risk for companies using blanket employer, one-size-fits-all non-compete agreements without a clear, legitimate business justification.

STATE LAW GOVERNS

With the federal ban gone, employers must operate under the existing state level non-compete laws, which vary greatly. Some states implement more employer friendly laws, while others, including Oklahoma, California, Minnesota, and North Dakota, completely ban most non-compete agreements, with a few exceptions. States that allow non-competes will be subject to increased scrutiny from the FTC on a case by case basis as described.

The increase in scrutiny does not change much for Oklahoma employers since Oklahoma already limited non-competes in this context.

OKLAHOMA SPECIFIC

As mentioned, in Oklahoma, non-competes are generally not enforceable in an employer and employee/contractor context anyway.

Keep in mind, this is different than a non-compete in a business purchase context or in company documents between company owners, which are enforceable in Oklahoma. Non-competes are enforceable in these contexts because it would put a significant chilling effect on people buying businesses if the seller could open shop next door the following day, or if a business partner could leave the business and start their own using all the same information immediately. These types of non-competes still must be drafted in a reasonable manner as to time and geographic limitation.

The best available option for Oklahoma employers is to utilize non-solicitation agreements to prevent client/customer and employee/contractor poaching, which provisions are enforceable if drafted correctly under Oklahoma law.