Key Takeaways And Access To Webinar Recording – FTC Non-Compete Enforcement Two Years Later: Enforcement & Workarounds

As part of Seyfarth’s 2026 Trade Secrets Webinar Series, our panel presented FTC Non-Compete Ban Two Years Later: Enforcement & Workarounds, examining how the non-compete landscape continues to evolve following the FTC’s abandoned rulemaking effort and the growing influence of state law.

Jesse Coleman, Gary Friedman, and Eron Reid led a practical discussion for in-house counsel, HR professionals, executives, and business leaders navigating an increasingly complex enforcement and compliance environment.

View the Recording – CLE credit for this recording expires on May 27, 2027. Please refer to the program description for jurisdiction-specific details and deadlines.

Key Takeaways

FTC Enforcement Has Shifted to a Case-by-Case Approach

Under new leadership, the FTC has moved away from attempting to impose a categorical ban on non-competes and instead is pursuing a case-by-case enforcement strategy. This approach applies a reasonableness standard similar to those long used by many states.

While the rulemaking effort may be behind us, federal scrutiny of restrictive covenants remains active—now focused on specific fact patterns rather than broad prohibitions.

Enforcement Is Targeting Overbroad Use of Non-Competes

Early enforcement actions indicate that the FTC is focusing on clear overuse and overreach, particularly where non-competes are:

• Applied broadly across employee populations
• Untethered to role, seniority, or access to sensitive information
• Used as a default rather than a tailored protection

These actions reinforce that employers should avoid “one-size-fits-all” restrictions and instead ensure covenants are narrowly aligned to legitimate business interests.

Healthcare Remains a Key Area of Focus

The health care industry continues to be a priority for enforcement, particularly where restrictive covenants are perceived to limit patient choice or access to care.

Employers in this space should expect continued scrutiny of non-competes involving physicians and other clinical professionals, especially in highly competitive or underserved markets.

“Education Through Enforcement” Will Continue

The FTC is expected to continue leveraging targeted enforcement actions as a tool to shape the law, effectively providing guidance through test cases and settlements.

This “education through enforcement” approach means employers should closely monitor developments, as each action may further define the boundaries of acceptable restrictive covenant practices.

State Law Patchwork Is Expanding

At the same time, employers face an increasingly complex patchwork of state laws governing non-competes and other restrictive covenants. These laws vary significantly and may include:

• Wage thresholds restricting enforceability
• Advance notice requirements
• Industry-specific limitations or outright bans

As a result, compliance must be managed on a jurisdiction-by-jurisdiction basis, with careful attention to applicable state requirements.

Uniform Agreements Are No Longer Sustainable

Given the divergence in state laws, multi-state employers can no longer rely on uniform agreements.

Instead, employers should consider:

• Modular agreements that adjust based on employee location
• State-specific templates tailored to local legal requirements

This approach helps balance enforceability with administrative efficiency while reducing legal risk.

Choice-of-Law Strategy Requires Reassessment

Employers should also re-evaluate whether to default to Delaware law when drafting restrictive covenants.

Although Delaware has traditionally been a preferred jurisdiction—particularly for companies incorporated there—its jurisprudence on restrictive covenants has shifted over the past several years and remains in flux.

Companies should:

• Assess whether Delaware has a meaningful nexus to the employment relationship
• Consider whether another jurisdiction tied to the workforce or business operations may provide a more reliable enforcement forum
• Avoid reflexively selecting Delaware without evaluating current legal trends

Although the FTC’s non-compete rule is no longer in effect, the broader movement to limit restrictive covenants continues to gain momentum through both federal enforcement and state legislation. Employers should take a proactive approach by tailoring agreements, strengthening alternative protections, and staying attuned to ongoing legal developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.