On 4 and 5 September 2025, the U.S. Federal Trade Commission ("FTC") issued three separate announcements concerning non-compete clauses in employment agreements.
- The first announcement relates to a public inquiry launched by the FTC with the aim of understanding the scope, prevalence, and effects of non-compete agreements between employers and employees. In this context, the announcement stated that the Trump-Vance Administration seeks to restore fairness in the U.S. labor market and that every response from the public would be duly considered.
- The other announcement of 4 September concerns a decision adopted against Gateway Services, Inc. ("Gateway"), a company active in the pet cremation services sector, requiring it to cease entering into non-compete agreements with its employees. The FTC found that Gateway had imposed a non-compete obligation on almost all of its employees, prohibiting them from working in any other U.S. pet cremation services provider for one year after termination of employment. Accordingly, the FTC ordered Gateway to immediately rescind such non-compete agreements and to notify its employees that they are no longer bound by them. However, while prohibiting non-compete clauses, the FTC exempted from this prohibition any restrictions covering current or prospective customers with whom the employee had direct contact or personally provided services during the last 12 months of employment at Gateway.
- The U.S. District Court for the Northern District of Texas ("the Court") annulled the FTC's Final Rule prohibiting non-compete clauses ("Non-Compete Clause Rule") on the ground of lack of statutory authority. In its announcement of 5 September, the FTC stated that it had decided to withdraw from the appellate process in the case concerning the vacatur of the Non-Compete Clause Rule. In other words, the FTC withdrew from the appellate process and accepted the Court's decision.
(FTC – 04.09.2025, 05.09.2025)
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