In November 2025, the Federal Trade Commission (“FTC”) finalized a consent order requiring an employer to cease enforcement of non-competition agreements with nearly 1,800 employees. This was the FTC’s first enforcement action related to non-competition agreements since the Trump administration decided to stop defending a Biden-era agency rule that would have banned most non-competition agreements. Similarly, in January 2026, the FTC held a webinar during which Chairman Andrew Ferguson stated that the “days of unreflective, unjustified, and anticompetitive noncompete agreements are over,” and “if a company wants to execute a noncompete agreement, they had best be prepared to defend it.”
The FTC has sent employers a strong signal: even though the current administration will not defend President Biden’s sweeping ban, the agency intends to continue to crack down on the overbroad restrictive covenants. In light of this, what actions should employers take to ensure compliance and avoid regulatory scrutiny? This article summarizes recent FTC action and provides tips for employers going forward.
Recent FTC Action Regarding Non-Competition Agreements
In September 2025, the FTC voted to dismiss its appeals of two federal court decisions enjoining a Biden administration rule that would have banned most non-competition agreements in the employment context. While this action was welcomed by many employers, the FTC has since taken several actions demonstrating that the agency intends to continue to initiate enforcement actions related to employers’ use of overbroad restrictive covenants.
Just days after the agency dismissed its appeals, FTC Chairman Andrew Ferguson sent letters to several large healthcare employers and staffing firms urging them to “conduct a comprehensive review of [their] employment agreements” and to immediately discontinue “using noncompetes that are unfair or anticompetitive.” In a related press release, the agency warned against noncompete agreements that “unreasonably limit healthcare professionals’ employment options and thereby limit patients’ choices over who provides their medical care.”
Also in September 2025, the FTC filed a complaint against Gateway Services, the largest pet cremation company in the United States, alleging that the company required nearly all of its employees to sign unlawful non-competition agreements. The complaint alleged that starting in 2019, the company adopted a policy of requiring non-competition agreements for all newly-hired employees regardless of their position. The company’s non-competition agreements prohibited employees from working in the pet cremation industry anywhere in the United States for one year following separation of their employment. This policy allegedly applied to over 1,780 U.S.-based employees, which meant that even low-level employees (such as drivers) were subject to the restrictions.
The FTC alleged that by entering into these agreements “without any individualized consideration of an employee’s role,” the company engaged in unfair methods of competition in violation of 15 U.S.C. § 45. In a related statement, Chairman Ferguson described the agency as a “cop on the beat, enforcing the antitrust laws against unlawful noncompete agreements to protect American workers.”
In November 2025, the FTC approved a final consent order with Gateway Services settling the charges in the complaint. The consent order has a term of ten years and prohibits the company from entering into non-competition agreements with covered employees that restrain the employee’s ability to seek employment with any other business for any period of time following termination of employment. The agreement specifically permits, however, certain non-competition agreements entered into in connection with the sale of a business or with a “director, officer, or senior employee” in conjunction with a grant of equity. Finally, the order states that the company may continue to use and enforce employee non-solicitation agreements, along with customer non-solicitation agreements that are limited to current or prospective customers with whom the employee had “direct contact or personally provided service” in the last 12 months of employment.
The FTC’s January 2026 Webinar on Noncompete Enforcement
In its most recent action to curb noncompete agreements, the FTC hosted a webinar on January 27, 2026 titled “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements.” During the webinar, speakers from the agency—including the Chairman—described non-competition agreements as a “perennial source of interest to the FTC” and provided a roadmap for employers regarding the FTC’s enforcement priorities.
Chairman Andrew Ferguson opened the session by stating that “many noncompete agreements likely violate our antitrust laws” and that the FTC will be using its “power to prosecute anti-competitive noncompete agreements” to target overbroad agreements on a “case-by-case” basis. The Chairman explained that in order to survive agency scrutiny, non-competition agreements must advance “some pro-competitive interest of the employer,” which could include protecting against the transmission of confidential information or protecting an employer’s investment in training employees with unique skillsets. He also underscored that agreements must be “narrowly tailored” to achieve the legitimate business interest, and that agreements that are unlimited in duration or that include a nationwide geographic reach are almost never defensible. The Chairman ended his remarks with a strong warning: “If a firm imposes a noncompete agreement that is not tailored to achieve a pro-competitive objective, that is intended to suppress competition or the bargaining power of American workers, or that contains an unlimited scope or duration, then the FTC will enforce the antitrust laws against that firm.”
Later in the webinar, FTC Commissioner Mark Meador outlined four principles that the FTC will consider in evaluating the legality of non-competition agreements. First, he stated that the agency will consider employee wage and skill level. A non-competition agreement is less likely to be enforceable if workers “lack extensive training, have limited access to non-public information, and are not performing specialized functions.” Second, a non-competition agreement must be limited in scope and duration, and in Commissioner Meador’s view, must be limited to one or two years and the geographic scope of the employer’s operations or the employee’s work area. Third, the FTC will consider the employer’s market power, because where there are only a handful of employers in a particular industry, non-competition agreements have a “much more pronounced effect.” Finally, the agency will look to evidence of the economic impact that the non-competition agreements have on the industry. Throughout the webinar, speakers focused on agreements in the healthcare and veterinary industries, as well as agreements targeting cosmetologists, nurses, interns, and bartenders, suggesting that these are areas of particular concern for the agency.
Practical Tips for Employers
In light of recent FTC enforcement actions, what steps should employers take going forward? To begin, employers should understand that regulatory scrutiny is growing and the FTC intends to use enforcement actions to curb the use of overbroad restrictive covenants. With this in mind, employers should review their practices with an eye toward the following principles:
- Don’t entirely abandon all restrictive covenant agreements. Although the agency has a renewed focus on non-competition agreements, the FTC acknowledged that narrowly tailored agreements are enforceable, provided they further the employer’s legitimate business interests (such as protection of confidential information or customer relationships).
- Avoid workforce-wide agreements. The FTC appears to be especially hostile to restrictions on unskilled or low-wage workers. Further, the Gateway Services consent order illustrates that the agency may target employers that require their entire workforce to sign non-competition agreements untethered to specific roles or responsibilities. Instead, employers should tailor non-competition agreements to employees who have access to confidential information or for whom the employer has invested significant resources in providing highly specialized training. For example, during the January webinar, Commissioner Meador contrasted the roles of nurses and bartenders—for whom he views non-competition agreements as unenforceable—with a machine learning research scientist that has a “unique skillset.” By individually considering each employee’s role before requiring the employee to sign a non-competition agreement, employers can bolster the argument that the agreement ultimately furthers a legitimate business interest and is not designed for the purpose of stifling competition.
- Carefully tailor geography and scope. Gateway Services’ noncompete agreements imposed a nationwide restriction, which the FTC characterized in its webinar as almost never enforceable. Employers should pay careful attention to the geographic restriction and duration of their agreements, and consider limiting the duration to one or two years and the geographic scope to the area where the employee actually performed services on behalf of the employer.
- Consider less restrictive alternatives. The FTC noted during its webinar that narrowly tailored non-solicitation and confidentiality agreements can often achieve the same results as noncompete provisions without the same legal risks. Furthermore, the Gateway Services consent order allowed the company to continue using some form of these agreements. For this reason, employers should consider whether they can achieve their business goals using these less risky alternatives.
- Pay particular attention to agreements with workers in the healthcare industry. The FTC appears to be focused on pursuing enforcement actions involving non-competition agreements with physicians, dentists, nurses, and others in the healthcare industry. Employers in these fields should therefore pay particular attention to the FTC’s actions going forward and take care to limit the reach of their non-competition agreements.
- Don’t ignore state law restrictions. In addition to the FTC’s current crackdown on non-competition agreements, many states have enacted or proposed laws limiting the reach of restrictive covenants. For example, Virginia, Maryland, and the District of Columbia impose wage thresholds for enforcing such agreements. Some state laws also include notice requirements, and certain states—including, for example, Colorado—impose criminal penalties on employers that violate their restrictive covenant statutes. Employers with large remote workforces that operate across various states should therefore pay particular attention to the patchwork of state law requirements and should consider consulting with legal counsel to ensure compliance.
