The Supreme Court has declined to block the Federal Trade Commission's authority to challenge non-compete agreements on a case-by-case basis, a significant win for workers' mobility and labor market competition. The 6-3 decision upholds the FTC's enforcement powers.
While the court previously struck down the FTC's blanket ban on non-competes, this ruling allows the agency to pursue individual enforcement actions against non-compete clauses it deems unfairly restrictive. The distinction preserves employer flexibility while protecting workers from the most egregious restrictions.
The decision has immediate implications for an estimated 30 million American workers currently bound by non-compete agreements. The FTC has signaled it will prioritize cases involving low-wage workers, healthcare professionals, and technology workers.
Business groups expressed disappointment but acknowledged the ruling provides more clarity than the previous legal uncertainty. "Companies can still use reasonable non-competes, but they need to ensure the restrictions are proportionate to legitimate business interests," says employment attorney Mark Foster.
Several states have already enacted their own non-compete reform laws, with California, Minnesota, and Oklahoma effectively banning the practice. The Supreme Court ruling creates a federal floor that complements these state-level protections.
