The FTC has launched an aggressive effort to root out anticompetitive employer-employee noncompete agreements, particularly in the health care industry. FTC Chair Andrew Ferguson issued letters to multiple health care employers and staffing firms, calling on them to discontinue noncompetes that are “unjustified, overbroad, or otherwise unfair or anticompetitive.” The letters follow multiple actions the FTC took last week that reveal that the agency is aggressively scrutinizing and challenging employer-employee noncompete agreements on a case-by-case basis, even as the agency abandoned its legal defense of the broader regulatory ban on noncompetes.
Ferguson Launches Letters to Health Care Employers and Staffing Firms
On September 10, 2025, the Federal Trade Commission (FTC) announced that Ferguson sent letters to “several” health care employers and staffing firms, calling on them to review their employment agreements for “unjustified, overbroad, or otherwise unfair” noncompete terms and other restrictions. The announcement and template letter claim that “many” health care employers and staffing firms use unduly broad noncompetes to “unreasonably limit employment options for vital roles,” such as nurses, physicians, and other medical professionals. The letter expresses particular concern about the effects of these employment restrictions on access to care in rural areas.
The letter calls on recipients to examine whether their noncompetes are overbroad in duration, geographic scope, or the roles to which they apply. If so, the letter urges recipients to “discontinue them immediately and to notify relevant employees of the discontinuance.”
While the letter makes clear that receiving the warning does not mean that the employer has engaged in illegal conduct, it does make clear that the FTC will focus its enforcement efforts on what it views as unlawful noncompetes, particularly in the health care industry. Notably, the federal focus on health care employers follows preexisting trends at the state level to limit or restrict noncompetes for physicians and other health care providers. Currently, multiple states approach health care providers differently from other employees.
Finally, this announcement also calls on all employers, not just those receiving letters, to review their noncompete agreements closely for compliance with the law.
FTC Formally Abandons Legal Defense of Biden-Era Noncompete Ban
Previously, on September 5, the FTC announced it was ending appeals of two district court decisions that enjoined enforcement of the Biden FTC’s rule, which would have imposed a near-total ban of noncompete agreements. The decision spells the end for the proposed national regulatory ban on all new, and most preexisting, employer noncompete agreements with employees and executives.
In a statement accompanying the announcement, Ferguson (joined by Commissioner Melissa Holyoak) criticized the now-defunct noncompete rule, saying the FTC would stop “tilting at windmills” and would instead “get down to the hard business of promoting labor competition” through case-by-case enforcement. Ferguson’s case-by-case enforcement approach appears similar to the standards under case law in many states.
Ferguson also previewed the FTC’s plans for further action, warning that “in the coming days, firms in industries plagued by thickets of noncompete agreements will receive warning letters from me, urging them to consider abandoning those agreements as the Commission prepares investigations and enforcement actions.”
In a separate concurring statement, Commissioner Mark Meador explained his “contextual framework” for how the FTC should evaluate noncompetes. According to Meador, the relevant employment context and circumstances to evaluate include:
- The wage and skill level of employees covered by a noncompete.
- Whether noncompetes are deployed across a distribution network, such as a franchise.
- Whether the covered worker is effectively an employee or truly an independent contractor.
Meador recommends the FTC consider the following factors in its legal analysis:
- Likelihood of free riding – such as employees’ free riding on an employer’s investments in their training or on the employees’ access to confidential know-how and proprietary information.
- Availability of less restrictive alternatives – such as nondisclosure agreements, asset-use restrictions, intellectual property protections, and, notably, customer nonsolicitation agreements.
- Scope and duration of the noncompete – including a suggestion that durations over one to two years, and geographic scopes beyond the employer’s current operations or the locations where the employee worked, “may be more likely to present competitive concerns.”
- Market power of the employer – but noting that a challenge under FTC Act Section 5 does not require the agency to show market power.
- Evidence of the economic effects of the noncompete – including whether the potential adverse effects are “substantially outweighed by reasonably certain procompetitive benefits that accrue to workers and consumers.”
Gateway Enforcement Action
The day before announcing the decision to abandon the blanket noncompete ban, the FTC announced a consent order with Gateway Services to address concerns about noncompete agreements that the pet cremation business had with almost all its employees. The FTC alleged that Gateway’s noncompetes prevented nearly 1,800 employees from being employed by another pet cremation company anywhere in the United States for one year after leaving Gateway employment.
According to the FTC, the provisions inhibited employees’ job mobility and ability to obtain better wages and benefits, and the terms had the purpose and effect of reducing competition. The FTC alleges that Gateway knowingly used noncompetes to stymie competitors and even applied the noncompetes to employees it soon thereafter fired, in areas where Gateway closed its facilities, and against individuals Gateway intended to employ as part of a transaction.
The FTC’s consent order against Gateway:
- Gateway from enforcing existing or entering into new noncompete agreements with most employees.
- Prohibits Gateway from communicating to covered employees that they are subject to a noncompete.
- Bars Gateway from preventing former employees from soliciting current or prospective Gateway customers, unless the former employee “had direct contact or personally provided service” to the customer within the prior 12 months of employment at Gateway.
The consent order does, however, permit Gateway to enter into and enforce noncompetes with a director, officer, or senior employee “in conjunction with the grant of equity or equity-based interests” in Gateway or in selling a business if the covered individuals have a preexisting equity interest in the business being sold.
In his accompanying statement, Ferguson (joined by Holyoak only) states that the action highlights the “FTC’s commitment to enforcing the law vigorously against those who demand their employees enter into noncompete agreements so pernicious and so onerous as to make them anticompetitive.”
Ferguson’s statement emphasizes that Gateway’s noncompetes were “neither reasonable in scope nor justified to protect a legitimate business interest,” were overly broad geographically, and applied “indiscriminately,” including to positions that were low-skilled and did not require “extensive training.” His statement also highlights that the consent order’s restrictions exclude (i.e., permit) certain noncompetes – namely, noncompetes with Gateway equity holders, “very senior management, those with outside business relationships with Gateway,” and employees “who otherwise have more unique access to competitively sensitive information.”
Ferguson indicated that his analysis was comparable to the common-law reasonableness inquiry applied by many state courts to assess noncompetes. This standard, he noted, “asks whether the restriction is no greater than necessary to protect the employer’s legitimate interests, and balances those interests against the hardship inflicted on the employee and any potential injury to the public.”
New FTC Noncompete RFI
On the same day it issued the Gateway consent, the FTC issued a request for information (RFI) to the public to help better understand the “scope, prevalence, and effects of employer noncompete agreements” and to “inform possible future enforcement actions.”
The RFI makes clear that the FTC is seeking specific enforcement targets. Among its 13 requests for information, many with multiple subparts, the RFI asks the public to provide:
- The names of specific employers that currently use noncompete agreements.
- The stated reason that the employer uses noncompetes.
- What roles and salary ranges are subject to noncompetes.
- The duration and geographic scope of the noncompetes.
- Whether the noncompetes are enforced.
- Whether the noncompetes deterred employees from switching jobs or starting new businesses or forced employees and competing employers to incur costs and other burdens to work around an employer’s noncompete.
The RFI singles out the health care industry, asking specifically whether noncompetes have affected “wages, labor mobility, or the availability, quality, or cost of healthcare services” and whether noncompetes have made it difficult to hire physicians, nurses, and other professionals, and thereby to compete in any specific health care service or geography.
Though focused on noncompetes, the RFI also seeks information about employers’ use of nonsolicitation and nonrecruitment agreements that inhibited former employees pursuing former customers or employees.
Takeaways
Collectively, the FTC’s recent noncompete-related actions serve as a preview of the agency’s likely future enforcement surrounding employer-employee agreements:
- The FTC is prioritizing scrutiny of noncompetes in the health care industry.
- The FTC is abandoning a prior rule to ban noncompete agreements across the board in favor of vigorous federal case-by-case antitrust enforcement.
- The three Republican FTC commissioners recognize that noncompetes can have procompetitive justifications and benefits but do not support a presumption of legality.
- Ferguson’s and Meador’s separate statements on noncompetes suggest some daylight between their approaches to noncompetes, but both generally favor holistic balancing approaches that examine the market context of employers’ noncompete agreements alongside the purpose, effect, possible alternatives to, and breadth of the noncompete agreement.
- The FTC is poised to pursue additional enforcement against noncompetes, particularly in the health care industry.
- Companies wishing to comment in response to the FTC’s noncompete request for information can submit comments through November 3, 2025.
All employers, particularly in the health care industry, should evaluate their existing practices for employee noncompetes in light of the FTC’s aggressive posture and monitor future federal and state law developments closely.
If you have any questions, or would like additional information, please contact one of the attorneys on our Antitrust team or one of the attorneys on our Labor & Employment team.
You can subscribe to future advisories and other Alston & Bird publications by completing our publications subscription form.