The National Labor Relations Board’s (NLRB) acting general counsel has officially withdrawn a memorandum issued by his predecessor that challenged the legality of certain non-compete agreements under federal labor law. The decision, announced last week, effectively ends the NLRB’s attempt to restrict non-compete clauses, at least in the near term.

The withdrawn memo had previously suggested that non-compete agreements could violate employees’ rights under the National Labor Relations Act by limiting their ability to seek alternative employment. However, unlike the Federal Trade Commission’s (FTC) separate push to restrict non-competes, the NLRB never issued regulations or heard a case backing this interpretation.

The FTC’s proposed regulations, which sought to prohibit most non-compete agreements under federal commerce laws, were blocked by a federal district court before they could take effect. The Trump administration has since advised an appellate court that it is weighing whether to continue defending the regulations, suggesting a possible policy reversal.

Employer groups had challenged both the NLRB and FTC’s positions, arguing that the agencies overstepped their authority. The Trump administration has shown little interest in regulating non-competes at the federal level, despite a number of red-state legislatures having restricted or banned such agreements in recent years.

With federal efforts now curtailed, non-compete agreements will remain subject to state laws. Employers must ensure that any such agreements comply with the laws of the states where their employees work, as legislative and judicial changes continue to shape the enforceability of these contracts.