- The FTC has dropped its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC, formally abandoning its Biden-era attempt to ban noncompetes nationwide.
- Chairman Andrew Ferguson has recently emphasized that the FTC will pursue case-specific enforcement actions under Section 5 of the FTC Act, guided by a common law "reasonableness" inquiry.
- In the first Trump-era FTC enforcement action, which led to the release of nearly 1,800 employees from their noncompetes at Gateway Pet Memorial Services, the agency provided a roadmap for its legal assessment of noncompetes.
- The FTC recently issued letters to healthcare companies warning them to review and eliminate potentially anticompetitive noncompete agreements--raising the question of whether home health, nursing, or physician noncompetes will be targeted next--and released a broad Request for Information to study noncompete practices across industries.
- Non-competes in M&A and for senior executives continue to be available for companies to protect their interests while those for workers in low-wage hourly jobs appear to be most suspect.
- As we typically advise employers, less is more when it comes to restrictive covenants. If employers stick to protecting just what they really need protected through restrictive covenants (mostly their confidential information), and they keep their restrictive covenants reasonable and limited to only employees who are in a position to do actual damage, it is far more likely that courts and the FTC will find their restrictive covenants enforceable.
The FTC's recent decision to dismiss its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC formally ends the Biden administration's attempt at a nationwide noncompete ban.1 Under former Chair Lina Khan, the FTC finalized a sweeping prohibition in 2024 that was projected to impact 30 million workers. Courts struck down the rule, holding that it was beyond the agency's authority2 and the Trump administration has now abandoned the appeal effort.
In his statement accompanying the dismissal of the appeals, Chairman Andrew Ferguson described the rule as patently illegal for displacing state laws.3 At the same time, he emphasized that the Commission will not retreat from the issue, but will instead rely on a steady stream of enforcement actions to police unlawful practices.4 Ferguson previewed that the agency will apply a reasonableness standard, weighing employers' legitimate interests against the burdens imposed on employees and potential harm to the public.
The first test of this enforcement-focused approach came on September 4, 2025, when the FTC announced a complaint and consent package against Gateway Pet Memorial Services.5 Gateway, the nation's largest pet cremation company, required nearly 1,800 employees—including hourly staff—to sign one-year nationwide noncompete agreements. The FTC argued these agreements violated Section 5 of the FTC Act: they applied to low-skill jobs needing little training, effectively pushed workers out of the industry due to being overly geographically broad, bound employees even after quick terminations or in areas where Gateway exited operations, and seemed designed to block competition where Gateway felt threatened. Under the consent deal, Gateway could keep limited noncompetes for senior executives or employees with special access to sensitive information, but the rest would be voided. The order also required notice to workers, set compliance obligations, and restricted future non-solicitation clauses while leaving narrow carveouts for executive equity agreements and sale-of-business deals.
For employers, the takeaway is clear: although the nationwide rule is gone, noncompetes remain in the FTC's sights. Ferguson's comments make plain that the agency will use targeted investigations to set precedent and shift behavior across industries. Already, the FTC has sent letters to healthcare companies urging them to review and eliminate potentially anticompetitive noncompete agreements and has issued a Request for Information to examine noncompete practices. The FTC is also pursuing education and outreach, including an upcoming workshop "Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements" scheduled for early October.6 This event underscores the current administration's efforts to spotlight the impact of noncompetes on workers and put businesses on notice of its enforcement priorities.
As many employers have learned the hard way, not only does the FTC take a hard look at restrictive covenants, but also, courts typically do as well. And courts are where employers spend a lot of money trying to enforce them. Given the FTC and the courts' skepticism, employers should likewise take a hard look at their restrictive covenants, along with their counsel, to ensure that they: are reasonable as to time, scope and geography; protect what actually needs to be protected (typically their trade secrets and confidential information); are only distributed to employees in a position to unfairly and improperly compete; and have a solid basis for actual enforcement in their applicable jurisdictions. Less is more regarding restrictive covenants. The less employers ask for, the more likely their restrictive covenants will be enforceable, and their expensive restrictive covenants litigation will bear fruit. To paraphrase the famous Rolling Stones song—you can't always get what you want, but if you try to keep your restrictive covenants reasonable, you may find you get what you need.
Footnotes
1. FTC Press Release, Sept. 5, 2025, https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule.
2. Ryan, LLC v FTC, No. 3:24-cv-00986-E, (N.D. Tex. Aug. 20, 2024).
3Statement of Chair Andrew N. Ferguson, joined by Commissioner Melissa Holyoak Regarding Ryan, LLC v. FTC, Sept. 5, 2025, https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-holyoak-statement-re-noncompete-acceding-vacatur.pdf
4. Id.
5. FTC Press Release, Sept. 4, 2025, https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-takes-action-protect-workers-noncompete-agreements.
6. FTC, Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements (Oct. 8, 2025), https://www.ftc.gov/news-events/events/2025/10/moving-forward-protecting-workers-anticompetitive-noncompete-agreements.
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