In April 2024, the Federal Trade Commission (FTC) issued a final rule that would have banned most non-compete agreements nationwide and required employers to rescind existing clauses. As expected, the rule immediately drew lawsuits—and it has never taken effect. In August 2024, a federal court in Texas set aside the rule on a nationwide basis, holding the FTC lacked authority to issue it. The FTC appealed, but in March 2025—after the change in administration—it asked appellate courts to pause those appeals while the agency reconsidered whether to keep defending the rule. Courts granted the pause. As of today, the Trump-led FTC has additional time (currently through early September 2025) to decide whether to abandon the defense altogether. tradesecretsandemployeemobility.comSkaddenFaegre DrinkerWhite & CaseHendershot Cowart P.C.
There is no federal ban on non-competes in force today. The 2024 FTC rule is blocked and under reconsideration; it has not taken effect and may never do so. tradesecretsandemployeemobility.comSkadden
The Trump administration’s FTC is unlikely to revive the rule. New leadership has signaled a shift away from defending it, and the agency itself sought time to reassess its position. The Wall Street JournalWhite & Case
State law controls. Several states broadly ban employee non-competes (with limited sale-of-business exceptions), while many others restrict them (e.g., by wage thresholds or notice requirements). California, North Dakota, Oklahoma, and Minnesota currently prohibit employee non-competes. Frost Brown Todd
FTC path: The most probable near-term outcome is that the FTC drops its appeal and lets the Texas decision stand, leaving non-compete policy to Congress and the states. Even if the agency did resume its defense, the Fifth Circuit’s skepticism—and the district court’s reasoning—make revival an uphill battle. Faegre Drinkertradesecretsandemployeemobility.com
Congressional action: A federal statute could preempt state approaches, but no such law is imminent. In fact, congressional energy has focused more on reshaping (or curtailing) the FTC than on codifying a non-compete ban. Reuters
Enforcement shift: Even without a federal ban, federal enforcers continue to target no-poach, wage-fixing, and certain information-sharing agreements. Expect that focus to continue under DOJ; treat those as high-risk. Arnold & Porter
Keep using them only where state law allows and tailor them narrowly (geography, duration, legitimate interests). Avoid blanket “industry-wide” restrictions. (States like CA/ND/OK/MN ban them for employees outright.) Frost Brown Todd
Carve-outs: Restrictions tied to sale of a business generally remain more enforceable, even in states that ban employee non-competes. Coordinate with counsel when buying or selling a shop. Frost Brown Todd
NDA/Confidentiality: Robust, role-specific NDAs to protect pricing, vendor terms, customer lists, SOPs, and marketing playbooks.
Non-solicitation: Prohibit solicitation of customers and employees for a defined period; many states treat these more favorably than non-competes.
Training-cost or bonus-repayment agreements: Where lawful, require repayment of clearly itemized, bona fide training costs if an employee departs very quickly.
IP & trade-secret hygiene: Lock down access controls, off-boarding checklists, and device return; pair with rapid cease-and-desist protocols.
Reasonable notice & garden leave (where permitted): Short paid notice periods for certain roles can reduce “walk-out-and-compete” risk.
Franchisee vs. franchisor: The FTC rule would have impacted employment non-competes, not the franchise relationship’s competitive covenants—but courts and states scrutinize overbreadth in both contexts. Continue to use narrowly tailored territorial protections in your franchise and asset-purchase documents. Skadden
No-poach between franchisees: Treat “don’t hire from other franchisees” provisions as high-risk. These have drawn federal and private challenges in recent years. Prefer non-solicit language tied to targeted raids and protect it with solid, pro-competitive justifications (e.g., training investments). Arnold & Porter
Multi-state hiring: Build a state-law matrix for your shops (corporate and franchise) so offer letters auto-swap the right clause set by location and pay level.
What state is the employee in?
→ If CA/ND/OK/MN: don’t use an employee non-compete; rely on NDA + non-solicit + trade-secret controls. Frost Brown Todd
→ Elsewhere: consider a narrow non-compete for truly sensitive roles (e.g., center managers with pricing/vendor data), plus NDA and non-solicit.
Is this tied to buying/selling a shop?
→ Use a broader sale-of-business non-compete (still reasonable in scope) and ensure consideration and term are well documented. Frost Brown Todd
Are you coordinating across franchise locations?
→ Avoid blanket no-poach provisions; rely on non-solicit + anti-raiding language vetted against DOJ guidance. Arnold & Porter
NDA: Define “Confidential Information” with examples unique to quick-lube ops (vendor pricing, SKU margins, service menus, SOPs, KPI dashboards).
Customer non-solicit: 12–24 months, limited to customers serviced or targeted by the employee in the last 12 months.
Employee non-solicit: 12 months, limited to employees with whom the departing employee worked closely.
Non-compete (where allowed): ≤12 months; radius tied to actual store trade area; scope limited to drive-through oil change services (not the whole automotive sector).
Inventory your agreements (per state) and update templates.
Swap in state-specific addenda in your ATS/HRIS so the right clauses generate automatically.
Tighten off-boarding: device + account recovery, customer list scrubs, immediate access revocation, reminder letter of ongoing obligations.
Train managers: what they can and can’t say about restrictions; how to respond to a suspected breach.
Coordinate with your franchise attorney before rolling changes system-wide.
The FTC’s 2024 non-compete ban is blocked and unlikely to be resurrected under current leadership. Treat state law as your north star and prioritize narrow, business-protective alternatives (NDAs, non-solicits, trade-secret practices) that are easier to enforce and less likely to draw scrutiny. tradesecretsandemployeemobility.comWhite & Case
This briefing is general information for operators in the Costa Oil system and isn’t legal advice. For specific situations, consult your franchise or employment counsel.
