On Friday, the Federal Trade Commission formally abandoned its effort to ban noncompete agreements nationwide, marking a decisive shift for millions of workers and employers—including those in commercial real estate. The move followed months of legal wrangling and policy uncertainty, culminating in a 3-1 FTC vote to withdraw the agency’s appeal and start the process of rescinding the regulation.
FTC Chair Andrew Ferguson explained that although it remains concerned about harmful noncompete practices, he sees the previous ban as exceeding the commission’s legal authority. Instead, the agency will focus on “case-by-case enforcement against the most abusive noncompetes”.
The controversy over noncompete agreements has been building since 2024, when the FTC, under then-Chair Lina Khan, announced a rule that sought to prohibit most employers from using such contracts.
Noncompetes typically restrict employees from joining rival firms or starting businesses in the same sector for a set period after leaving their job—a practice the FTC argued was detrimental to worker mobility and wage growth. The commission estimated that roughly 30 million Americans, nearly one in five workers, were bound by these clauses, spanning everyone from hourly employees to corporate executives. That broad impact positioned the rule as one of the most far-reaching labor market reforms in decades.
Yet, before the rule could take effect, a federal judge in Texas invalidated it, ruling that the FTC had overstepped its authority. Business groups, including many representing commercial real estate, welcomed the court’s decision, citing fears about disruption to operational models, protection of confidential information and increased employee turnover. Ryan LLC, a tax services firm at the center of the lawsuit, said that the proposed ban risked “serious and irreparable harm” by making it easier for competitors to poach staff and proprietary knowledge.
For the commercial real estate sector, Friday’s decision preserves long-standing employment practices that shape how firms recruit, retain and train talent. Brokerages and executive teams in CRE regularly use noncompete clauses to limit the flow of client relationships, trade secrets and insider market data to direct competitors—a dynamic the FTC itself described as “harmful” when these agreements are overly restrictive.
Now, rather than an outright ban, the agency plans to pursue targeted enforcement against noncompete agreements it deems “pernicious and so onerous as to make them anticompetitive.”
Under the new approach, most workers in commercial real estate will remain subject to noncompete provisions, but agreements with unusually broad geographic reach or durations could attract scrutiny.
Industry reaction has been measured, with many employers expressing relief, while labor advocates warn that renewed enforcement may be slow and patchwork. In its analysis of the decision, NPR noted that the agency’s shift to enforcement under established antitrust law—rather than across-the-board prohibition—could result in more litigation, particularly where firms make noncompetes a condition of employment for lower-level staff. That’s a notable issue in real estate, where both back-office employees and high-earning brokers have historically signed such agreements.
By retaining noncompetes, CRE firms can continue to protect their investments in training and relationship-building, but they face the prospect of more aggressive government intervention for contracts deemed overly harsh. The FTC’s own prior research suggested that eliminating noncompetes could lead to wage increases approaching $300 billion annually and spark the creation of thousands of new businesses, yet the immediate effect of Friday’s reversal is to keep the status quo in place—at least in the short term. Whether CRE sees broader change will largely depend on future enforcement actions and shifting interpretations at both the federal and state levels.
As the dust settles, CRE executives, legal counsel and employees alike will be watching closely to see how far the FTC goes in targeting industry practices that, while long-standing, may now fall under heightened regulatory scrutiny. For now, the national ban is off, but the agency signaled it is not abandoning the field. “Protecting workers against the most abusive noncompetes remains a priority,” Ferguson has said.
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