On September 5, 2025, the Federal Trade Commission (FTC) finally put an end to its efforts to defend the agency’s Final Non-Compete Rule – issued in April 2024 – by withdrawing its appeals in Ryan, LLC v. FTC, No. 24-10951 (5th Circuit) and Properties of the Villages, Inc. v. FTC, No. 24-13102 (11th Circuit). However, the FTC made clear that this is not the end of its enforcement efforts.
Just a day prior, FTC Chairman Andrew Ferguson issued a statement announcing that while the FTC would no longer pursue broad rulemaking authority regarding non-compete agreements, the agency would continue to pursue enforcement action against employers improperly utilizing overly broad employment agreements on a case-by-case basis.
Cautionary Tale: FTC Complaint Targets Post-Employment Non-Compete Overuse
On the same day, the FTC emphasized its new enforcement strategy in a press release highlighting a complaint filed against Gateway Services, Inc., a pet cremation company with nearly 2,000 employees, which – since 2019 – required all new employees, except those in California, to sign non-compete agreements prohibiting them from working in the pet cremation industry nationwide for one year following termination. The requirement applied indiscriminately to nearly 1,800 employees from hourly laborers to senior executives.
Pursuant to the FTC’s proposed consent order, Gateway must:
- Cease entering into or enforcing non-compete agreements, with limited exceptions;
- Limit non-solicitation restrictions to customers with whom the employee had direct contact within the past 12 months of service; and
- Notify employees that they are no longer bound by non-compete agreements.
FTC Targets Healthcare Employers and Staffing Companies
Shortly thereafter, on September 10, the FTC announced that it had issued letters to several large healthcare employers and staffing companies warning them not to include overly broad non-compete restrictions in employee contracts. While the FTC did not identify the employers that received the letters, it did provide the template letter, which in part:
- Acknowledged that “many healthcare employers and staffing companies include noncompete agreements… in employment contracts that may unreasonably limit employment options for vital roles like nurses, physicians, and other medical professionals.”
- Urged employers to “conduct a comprehensive review of [their] employment agreements” to ensure that they both comply with applicable laws and are appropriately tailored to the circumstances.
- Strongly encouraged employers “currently using noncompetes that are unfair or anticompetitive under the FTC Act” to “discontinue them immediately and to notify relevant employees of the discontinuance.”
Employer Takeaways
While the Final Non-Compete Rule is now officially dead, employers should remain mindful of state-specific laws and legislation regarding non-compete agreements (see HERE). To mitigate risk and ensure compliance, consider taking these steps:
- Review non-compete agreements to ensure compliance with all applicable laws;
- Tailor agreements and policies to protect the employer’s legitimate business interests;
- Explore alternatives to non-compete agreements that may accomplish the goal of protecting legitimate business interests;
- Avoid non-compete agreements that contain no geographic restrictions and/or apply to unskilled or low wage workers; and
- Continue to monitor for updates on pending restrictive covenant legislation.
If you have any questions related to the FTC’s enforcement efforts or need assistance reviewing your non-compete agreements and policies, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100 or 619.292.0515.