Federal Trade Commission Turns Its Back on Workers and Stands Up for Bad Bosses
The FTC Withdraws From Defending Landmark Non-Compete Ban, Leaving Workers Unprotected from Exploitative Contracts, Including TRAPs and Other Stay-or-Pays
WASHINGTON - The Federal Trade Commission (FTC) withdrew from the fight to free workers from non-compete clauses on Friday, filing a motion to withdraw from a case defending its rule banning traditional and de facto non-competes. Employer interests sued to block the rule in April 2024, and a judge in the Northern District of Texas granted them their request in August 2024 and prevented the rule from taking effect across the country. The rule would have outlawed new non-competes and voided existing ones for nearly all workers, empowering millions to seek better jobs or pursue their entrepreneurial dreams.
“This is a major setback for working people in the United States,” said Open Markets Institute Legal Director Sandeep Vaheesan. “Instead of defending a rule that frees tens of millions of Americans from non-compete clauses that bind them to their present job, FTC Chair Andrew Ferguson, who promised to deliver a “golden age for workers” in January, once again sides with corporate interests. Contrary to Ferguson’s assertion that the rule was patently unlawful, a judge in Pennsylvania ruled otherwise and refused to put it on pause in July 2024. The ban is based in law, evidence, and longstanding American competition policy.”
“The Trump Administration just handed corporations a license to trap workers in bad jobs. Research shows that employers are increasingly relying on TRAPs, a contract term that is akin to modern-day indentured servitude—forcing low-wage workers to pay their bosses just to quit. By abandoning this fight, Trump and FTC Chair Ferguson are turning their backs on working people. This FTC will be remembered for rigging the system—suppressing wages, crushing economic freedom, and putting bosses before people,” said Student Borrower Protection Center (SBPC) senior policy advisor Chris Hicks.
Instead of defending a rule that would empower workers and honest employers, the FTC indicated it instead plans to review the use of non-competes on a case-by-case basis. This means that if a worker is locked into a non-compete and files a complaint with the FTC, it could take years to find out if it is an enforceable contract term or not. With tens of millions of workers bound by non-compete clauses, even a sustained enforcement campaign no substitute for a blanket prohibition on these coercive contractual provisions.
The FTC estimated that banning non-competes would empower the roughly one-in-five Americans currently restrained by non-compete agreements to seek better wages and working conditions with other employers. It was expected to promote the creation of more than 8,500 new businesses each year and generate over $400 billion in increased wages for workers over the next decade.
Even if the FTC rule never takes effect, it fundamentally changed the policy discourse on non-compete clauses and related restraints on worker mobility. By researching the problem in depth and enacting a complete ban, the FTC helped popularize complete bans as the correct policy and catalyzed reform at the state level. Instead of targeted measures protecting only low-wage workers or workers in certain occupations, more state lawmakers and legislatures are now proposing total or near-total bans on non-compete clauses.
Open Markets has consistently advocated against non-compete agreements through legal analysis, policy research, and public comment. These efforts include
In March 2019, Open Markets led a labor and public interest coalition, which included the AFL-CIO, Public Citizen, SEIU, and UFCW, that petitioned for an FTC rule banning non-compete clauses for all workers. In the following months and years, we continued to advocate for a blanket ban and strong FTC rule through public advocacy.
Open Markets hailed the non-compete ban that the FTC proposed in January 2023 and identified in its public comment and writing how the FTC could strengthen the final rule to protect all workers from non-competes and similar such contracts.
In 2024, Open Markets Institute filed an amicus brief in Villages v. FTC, arguing that non-compete agreements are an unfair method of competition and that banning them aligns with the FTC Act and the agency’s historical policymaking, in response to a lower court ruling that the FTC exceeded its authority—a decision now under appeal.
Following suit in 2025, Open Markets Institute filed an amicus brief in Ryan v. FTC, marking the second appellate case in which Open Markets has defended the Federal Trade Commission’s (FTC) prohibition on non-compete clauses.
In March 2025, Chief Economist Brian Callaci testified in support of preserving Minnesota’s blanket ban on non-compete clauses. His testimony highlights the negative impact of non-competes and similar contractual provisions on workers and the labor market.
Most recently, Open Markets wrote to FTC Chair Ferguson urging him to defend the ban in the courts and providing the legal and socioeconomic arguments for doing so.