FTC’s noncompete ban is dead, but its efforts to limit noncompetes survive

In 2024, the Federal Trade Commission promulgated a nationwide rule banning most non-competition agreements. After more than a year of litigation holding up enforcement of the FTC’s rule, the Trump administration announced last year that it would dismiss its attempts to overturn the injunctions that ban the enforcement of the rule.

Surprisingly, however, the FTC has also taken several actions indicating that the agency will continue to try to curb the use of noncompetes, especially in the health care industry.

New FTC Efforts

On September 4, 2025, the FTC launched a public inquiry “to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.”

The inquiry is soliciting comments from the public “to help shine a light on unfair and anticompetitive agreements.” In a statement announcing the inquiry, the FTC acknowledged that “[w]hile noncompete agreements can serve valid purposes in some circumstances, available evidence indicates that they are often subject to abuse” and can lead to unwanted consequences.

The inquiry goes on to state that noncompetes “may unjustifiably prevent workers from moving to better jobs, impede new business formation, prevent the shift of labor from over-served to under-served markets, and harm rival employers’ ability to compete” leading to “lower worker earnings, lost innovation, higher consumer prices, and overall negative effects on workers’ and consumers’ quality of life.”

At the same time, the FTC announced that it was taking action against the nation’s largest pet cremation business to require it to stop enforcing noncompete agreements with nearly 1,800 workers. The FTC’s complaint alleged that Gateway US Holdings Inc. adopted a policy requiring noncompete agreements for all newly hired employees, regardless of their position or responsibilities, including low-paid drivers, customer service representatives and others.

These agreements typically require that, for one year following the conclusion of employment with Gateway, the employee is prohibited from working in the pet cremation service industry anywhere in the United States. The FTC charged that Gateway’s noncompete agreements were unfair methods of competition in violation of Section 5 of the FTC Act.

Further, on September 10, 2025, the FTC Chairman, Andrew Feguson, sent warning letters to several large health care employers and staffing firms stating that “[t]he FTC is focusing resources on enforcing Section 5 of the FTC Act against unlawful non-competes, particularly in the healthcare sector.” The letter also contained the directive that “[i]f your company is currently using non-competes that are unfair or anticompetitive under the FTC Act, I strongly encourage you to discontinue them immediately and to notify relevant employees of the discontinuance.”

In addition to targeting noncompete agreements, the FTC has also taken action against employers that utilize “no-hire” agreements because of their anticompetitive nature. In December 2025, the FTC announced that it had reached a consent agreement with a building services company, Adamas Amenity Services LLC, and its affiliated businesses to cease enforcement of the companies’ no-hire agreements.

The FTC alleged that the no-hire clauses: (a) kept building owners from hiring Adamas’ employees; (b) disadvantaged employees who might have to leave their jobs if the building management changes, and (c) limit the ability of building owners from accepting bids from any of Adamas’ competitors due to the chance of losing long-serving employees. The agency indicated that it will continue to scrutinize no-hire agreements that suppress competition.

Danger ahead

Curbing the use of noncompetes in the health care industry has also been the subject of recent legislative efforts in Maryland and the District of Columbia. Accordingly, as the FTC increases targeted enforcement efforts and states enact new laws and tighten current restrictions, the patchwork of noncompete regulation across the country will become more difficult to navigate. Employers, therefore, especially those in the health care industry, should seek legal counsel to ensure their agreements comply with changes in state and federal law.

Barry F. Rosen leads the Health Care Practice Group at Gordon Feinblatt, and he can be reached at 410-576-4224 or [email protected]. Charles R. Bacharach leads the Employment Law Practice Group at Gordon Feinblatt, and he can be reached at 410-576-4169 or [email protected]