In a significant shift in its regulatory strategy, the Federal Trade Commission (FTC) has moved away from sweeping rulemaking on non-compete agreements and adopted a case-by-case enforcement approach. This pivot comes in the wake of judicial setbacks to the 2024 Non-Compete Rule and, ultimately, the FTC’s September 5, 2025 decision to abandon its appeal of the Non-Compete Clause Rule, which was vacated by a Texas federal court in 2024. Rather than continue the legal battle, the FTC opted to accede to the vacatur (accept the court’s decision) and refocus its efforts on case-by-case enforcement under Section 5 of the FTC Act, which better aligns with longstanding antitrust principles that assess non-competes based on their reasonableness and competitive impact in specific contexts.
The RFI: Targeted Enforcement and Public Engagement
Consistent with that pivot, on September 4, 2025, the FTC issued a comprehensive Request for Information (RFI) seeking public input on the use and impact of non-compete agreements across all industries. The RFI outlines the FTC’s concerns that non-competes, once considered a tool for protecting legitimate business interests, are increasingly used to harm workers, stifle innovation, and distort labor markets.
The RFI seeks public input from:
- Current and former employees affected by non-competes.
- Employers facing hiring challenges due to competitors’ restrictive contracts.
- Health care providers and market participants concerned about labor shortages and service limitations.
In the RFI, the FTC seeks answers to 13 questions (excluding subparts) on a variety of topics, including, but not limited to:
- Which employers use non-compete agreements?
- What roles and salary ranges are affected?
- What are the terms (duration, geographic scope) of these agreements?
- How are the non-competes enforced?
- Do the non-competes harm workers?
- Do the non-competes make it more difficult for rival employers to hire employees?
- Do non-competes prevent business formation or innovation?
- Does the employer use customer or employee non-solicitation provisions?
- How do non-competes affect health care access, wages, and competition?
The RFI, combined with the FTC’s action against Gateway Services, Inc. and warning letters issued to health care employers and staffing firms and the FTC’s upcoming “non-compete workshop” make clear the FTC’s increased scrutiny of non-competes not only will continue, but that scrutiny may become more intense. In fact, FTC Chairman Andrew Ferguson and Commissioner Melissa Holyoak emphasized that the Gateway Services case reflected the FTC’s shift toward case-by-case enforcement over broad regulatory bans.
What Employers Should Do Now
Given this renewed focus on non-competes, employers should take proactive steps to mitigate legal and regulatory risk:
- Audit existing non-compete agreements: Review all non-competes to ensure they are narrowly tailored in scope, duration, and geography.
- Justify restrictions: Ensure you can identify the legitimate business interests that require non-compete provisions to ensure they are adequately protected.
- Avoid blanket policies: Refrain from requiring low-wage or non-managerial employees to sign non-competes without clear justification.
- Monitor state laws: Multiple states have enacted, and more have pending legislation, that will significantly impact enforcement of non-competes.
- Consider alternatives: Use non-solicitation provisions, NDAs, garden leave provisions, or retention bonuses as less restrictive tools to protect your business.
Conclusion: A New Enforcement Era
The FTC’s shift from rulemaking to targeted enforcement marks a pragmatic turn in its approach to labor market regulation. While the Non-Compete Rule may be dead, the agency’s commitment to protecting workers from anti-competitive restraints is stronger than ever. Employers should take heed: the era of “routine” non-competes is over. The FTC is watching, and it’s asking the public to help it see more clearly.
