The year 2025 has turned out to be the gift that keeps on giving. As it comes to an end, the U.S. labor market has slowly but firmly shifted from federal mandates to a state-driven legal arena. Many workers are asking, “Is the FTC non-compete ban officially dead?” following the September dismissal of the federal appeal. While others are searching for enforceable non-compete agreements by state to learn more about recent restrictions. Moreover, the rise of stay-or-pay tactics has led to an increase in queries over TRAP agreements across US states.
These questions reflect a great reversal in worker mobility laws. As the FTC non-compete ban failed to standardize rules across the nation, employers are now relying on non-compete agreements in states where they remain legal. The recent enactment of the Trapped at Work Act in New York and similar bans in California is now facing its toughest judicial challenge yet.
Is the FTC non-compete ban officially dead? And what does 2026 look like as federal rules fail and state laws like the Trapped at Work Act (TRAP) take over? (Image: Pexels)
2025 US Non-Compete & TRAP Agreement Guide
The legal battle over non-compete agreements reached a definitive turning point in September 2025. While the Federal Trade Commission (FTC) initially sought to eliminate these clauses nationwide, federal court rulings and a change in administrative priorities have shifted the battlefield back to the state level.
Below are the most pressing questions and trending topics for employers and employees today.
What is the current status of the FTC non-compete ban?
As of now, the nationwide FTC non-compete ban is officially dead. Following a series of injunctions from federal courts in Texas and Florida, the FTC voluntarily dismissed its appeal in September 2025. This means there is no federal rule prohibiting non-compete agreements across the country. However, the FTC has stated it will pursue “targeted enforcement” against companies using non-compete agreements in an “oppressive” or “anticompetitive” manner, particularly in the healthcare and staffing sectors.
Are non-compete agreements still enforceable in 2025?
Yes, but enforceability now depends almost entirely on your state. Because the FTC non-compete ban failed to take effect, the “reasonableness test” remains the standard in most jurisdictions. To be enforceable, non-compete agreements must typically:
- Protect a legitimate business interest, such as trade secrets.
- Be reasonable in geographic scope and duration, i.e., usually under 1 year.
- Provide “adequate consideration” (something of value given to the employee in exchange for signing).
Which states have a total non-compete ban?
As of late 2025, four states maintain a near-total ban on non-compete agreements: California, Minnesota, North Dakota, and Oklahoma. If you work in these states, your non-compete agreements are generally void and unenforceable regardless of your salary or job title.
What are the 2025 salary thresholds for non-compete agreements?
For states that haven’t issued a total ban, many have implemented “low-wage” protections. In these states, non-compete agreements are only legal for “highly compensated” employees.
| State | 2025 Salary Threshold (Approx.) |
| Washington DC | $154,200+ |
| Washington State | $123,394+ |
| Colorado | $127,091+ |
| Oregon | $116,427+ |
| Illinois | $75,000+ (Increases in 2027) |
| Virginia | ~$76,081+ |
What are TRAP agreements and are they legal?
TRAP agreements, also known as Training Repayment Agreement Provisions, have turned out to be increasingly complicated to understand for employees and employers alike. Simply put, these are ‘stay-or-pay’ clauses where an employee is required to pay back training or onboarding costs if they quit before a certain date.
While TRAP agreements are often used as a workaround for non-compete agreements, they are facing heavy scrutiny. In December 2025, New York passed the “Trapped at Work Act,” which effectively bans most TRAP agreements by labeling them as “unconscionable” promissory notes. California and Colorado have similar restrictions, viewing TRAP agreements as a form of illegal debt if the training is not a “transferable credential” (like a degree).
Can my employer sue me for violating a non-compete in 2025?
Yes! Without the FTC non-compete ban to protect your rights, an employer can sue for monetary damages or an injunction to stop you from working for a competitor.
It goes without saying that this year has seen a trend of judicial skepticism. Many state courts across the US are now refusing to edit overly broad non-compete agreements.
As we move into 2026, the current era of one-size-fits-all federal policy has officially ended. The failure of the FTC non-compete ban means that both employees and HR departments must now understand the local laws. This also means that employers are now moving away from traditional non-compete agreements in favor of robust non-solicitation and trade secret protections, while employees are gaining new leverage through state-level transparency. If your career or company heavily relies on TRAP agreements or non-compete agreements, now is the time to audit these contracts for better compliance in 2026.
