Takeaways
- The FTC’s withdrawal of its broad non-compete ban does not signal a retreat from enforcement—in fact, the agency is sharpening its focus.
- Recent FTC actions show a clear shift toward targeted, case-by-case challenges to non-compete agreements deemed unfair or overbroad.
- A new FTC complaint highlights the agency’s concern with blanket non-competes applied without regard to job role or responsibility.
It would not be unreasonable to question the future of FTC enforcement against non-compete agreements after the FTC abandoned the prior administration’s rule banning nearly all employee non-compete agreements.[1] But the FTC has signaled its intent to continue enforcement against those non-compete agreements that unreasonably restrain employment options in a more targeted, case-by-case manner under Section 5 of the FTC Act (15 U.S.C. § 45).
First, the FTC Commissioners who voted to abandon the FTC’s appeal of a court order vacating the rule banning nearly all non-compete agreements in employment contracts issued statements indicating that their vote is not a signal that the FTC is walking away from enforcement in this area altogether. Chairman Ferguson and Commissioner Holyoake said they “will continue to enforce the antitrust laws aggressively against non[-]compete agreements.”[2] Commissioner Meador issued a statement setting forth how he would evaluate non[-]competes under “a more balanced enforcement approach than that contemplated by the noncompete rule,” recognizing that they “are neither uniformly benign nor invariably harmful.”[3]
Second, the FTC filed a complaint and proposed consent order against Gateway, Inc., the nation’s largest pet cremation business, which compels Gateway to immediately cease using its existing non-compete agreements. In its complaint, the FTC focused on Gateway’s alleged policy to require non-compete agreements for nearly every new hire.[4] The FTC emphasized that “Gateway applies its Non-Compete Agreements without any individualized consideration of an employee’s role” and that the “Non-Compete Agreements cover both highly-compensated executives and hourly workers, including facility level laborers.”[5] The FTC contended this blanket use of non-competes without regard for an employee’s responsibilities were unfair methods of competition.
Third, the FTC launched a public inquiry requesting comments to better understand the effects of non-compete agreements in use and “gather information to inform possible future enforcement actions.”[6] The public inquiry outlines some of the conditions and effects of non-compete agreements the FTC will look for when making enforcement decisions. In particular, the FTC highlighted its concern for situations where non-compete agreements “unjustifiably prevent workers from moving to better jobs” and where non-competes reduce competition for labor such that they “impede new business formation” and result in “lost innovation.”[7] The FTC received 134 public comments on the issue.[8]
Finally, FTC Chairman Ferguson sent warning letters to several large healthcare employers and staffing firms. The letters caution them that non-compete agreements in employment contracts “may unreasonably limit employment options” for healthcare workers and professionals, as well as restrict patients’ choices of providers. [9] The FTC noted overbroad non-compete agreements or instances where non-compete agreements are imposed without consideration for the circumstances of the employee may be unfair methods of competition under Section 5 of the FTC Act.[10] The letters encouraged the recipients to review their non-compete agreements to ensure they are not unfair or anticompetitive under the FTC Act and immediately discontinue any that may be unlawful.
These actions signal the FTC’s intent to continue to challenge non-compete agreements on a case-by-case basis. Employers should be aware that, in addition to FTC enforcement, they are also subject to state laws regulating, or in some cases banning, many types of non-competes. As such, employers should consider reviewing the range of non-compete agreements (including related agreements such as confidentiality agreements) they utilize to assess compliance with all applicable laws and regulations and assess risk of FTC or state action. Employers should pay particular attention to the FTC’s emphasis on the use of non-compete agreements in a widespread manner without taking into consideration the varying circumstances presented by employees, such as pay or responsibilities—including contact with customers or proprietary information.
Dykema is closely monitoring state and federal challenges to non-competes. For more information, please contact Howard Iwrey, Cody Rockey, Jim Hermon, Matthew Fellows, or your Dykema relationship attorney.
[1] https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule?utm_source=govdelivery.
[2] https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-holyoak-statement-re-noncompete-acceding-vacatur.pdf
[3] https://www.ftc.gov/system/files/ftc_gov/pdf/meador-statement-noncompete-agreements-9.5.25.pdf
[4] https://www.ftc.gov/system/files/ftc_gov/pdf/Gateway-Complaint.pdf.
[5] Id.
[6] https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-issues-request-information-employee-noncompete-agreements.
[7] https://www.ftc.gov/system/files/ftc_gov/pdf/2025-Noncompete-RFI.pdf.
[8] https://www.regulations.gov/document/FTC-2025-0463-0001.
[9] https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-chairman-ferguson-issues-noncompete-warning-letters-healthcare-employers-staffing-companies.
[10] Id.