FTC continues enforcement focus on non-competes

Under the Trump Administration, the US Federal Trade Commission (FTC) has continued its now almost decade-long focus on antitrust issues in labor markets.

Following the FTC’s creation of a new Joint Labor Task Force in March, the FTC has taken several actions in recent weeks that signal continued scrutiny of non-compete agreements in particular, though the current FTC is taking a more targeted, case-by-case approach than the previous administration’s attempt to ban nearly all non-competes through rulemaking. Among its actions, the FTC has singled out the healthcare industry (long an area of the agency’s focus) as an industry where it believes employee non-competes, particularly with physicians and other healthcare providers, can have significant anticompetitive effects. And just earlier this week, the FTC announced that it will be holding a workshop in early October on non-compete agreements “to highlight the negative impact of noncompete agreements on American workers and put business on notice of [the FTC’s] current enforcement priorities.”¹

FTC returns to enforcement; taking aim at overbroad non-competes

At the beginning of September, the FTC announced² that it filed a complaint³ and entered a proposed consent order⁴ with Gateway Services, Inc. and Gateway Holdings, the nation’s largest pet cremation business, to prevent Gateway from enforcing non-compete and non-solicitation agreements against nearly 1,800 US-based workers and from entering new agreements, with some narrow exceptions. The order does not apply to non-competes entered into with “directors, officers or senior employees” in conjunction with an equity award.

The proposed consent order requires Gateway to provide notice to all US-based employees that they are no longer subject to a non-compete and are free to work for competitors or start a competing business.⁵ The order also prohibits enforcement of customer non-solicitation agreements, unless the specific employee provided direct service to the customer within the last year. The proposed order also requires Gateway to submit annual compliance reports to the FTC for the next 10 years and retain communications with new hires for even longer.⁶

The consent order with Gateway is broad, as was Gateway’s use of non-competes, which the FTC’s complaint describes as being used with even hourly and low-wage workers with no “individualized consideration of an employee’s role.”⁷ The agreements also prohibited employees from working in the pet cremation industry anywhere in the United States, not just within a particular community. The FTC’s investigation also obtained internal communications that appeared to show that Gateway was intentionally using non-competes to avoid or suppress competition.⁸

FTC seeks public input on non-competes after withdrawing appeal of non-compete rule

The day after announcing its enforcement action and consent decree against Gateway, the FTC also broke the news that it was officially withdrawing its appeal in Ryan, LLC v. FTC, No. 24-10951 (5th Cir. 2025), clearing the way for vacatur of the Non-Compete Rule issued during the Biden Administration.⁹ In announcing the FTC’s action, the FTC Chair Andrew Ferguson criticized the prior administration for committing significant resources to aggressive, “wasteful” rulemaking instead of direct enforcement.¹⁰ Ferguson said that under his tenure, the FTC would target specific anticompetitive conduct with aggressive enforcement against “bad actors,” pointing to its Complaint and Consent Order with Gateway as an example. 

To support its “aggressive case-by-case enforcement,” the agency also launched an official public inquiry, requesting information regarding non-compete agreements from both employers and employees.¹¹The FTC is accepting both public and confidential responses to the request through November 3, 2025. Notably, the request for information asks respondents for “the name of any employer currently known to you to be using employee non-compete agreements[.]”

The FTC targets non-competes in the healthcare industry

The FTC has noted that it is prioritizing enforcement against what it views as “bad actors” who are using non-compete agreements explicitly to diminish competition or without regard to individual employee roles, geographic limitations or duration.

Chairman Ferguson has warned that “firms in industries plagued by thickets of non-compete agreements will receive warning letters from me, urging them to consider abandoning those agreements….”¹²

Less than a week later, Ferguson sent a number of warning letters to (unnamed) employers and staffing firms in the healthcare industry, pointing out the negative impact non-compete agreements in employment contracts between healthcare employers and physicians, nurses, and other medical professionals can have on patient choice, particularly in rural areas.¹³

Takeaways for clients

The FTC is committed to continued enforcement against companies that use non-compete agreements it views as anticompetitive. Given the increased enforcement risks, companies should consider taking steps to mitigate risks, including by:

• Reviewing existing agreements: Evaluate current agreements that are more likely to draw scrutiny, particularly non-compete or non-solicitation agreements that are not restricted to certain employees, contexts or location.
• Being aware: With the FTC’s continued focus on labor in merger reviews, aggressive acquisition activity can draw attention to the use of non-compete agreements.
• Staying informed: Keep abreast of FTC guidance and enforcement actions, as the FTC’s request for public comment and subsequent warning letters to those in the healthcare industry suggest continued focus on non-competes.