The regulatory landscape for noncompete agreements shifted dramatically in 2025. On Sept. 5, the Federal Trade Commission took steps to formally end its efforts to implement a nationwide ban on noncompetes, agreeing to vacate the Non-Compete Clause Rule and dismiss all pending appeals. However, noncompetes remain under scrutiny—especially in the staffing and health care sectors—as the FTC signals a strong intent to continue case-by-case enforcement against unfair or anticompetitive noncompetes.
The FTC’s Non-Compete Clause Rule, issued in April 2024, would have barred most postemployment noncompete agreements nationwide. It was immediately challenged in federal court, and by August 2024 a district court enjoined enforcement. Subsequent litigation and a change in federal administration led the FTC to abandon its appeals, effectively vacating the rule.
Noncompete Reset
- Litigation concludes: The FTC has withdrawn its appeals in both Ryan LLC v. FTC (5th Cir.) and Properties of the Villages v. FTC (11th Cir.), vacating the Non-Compete Clause Rule.
- State law controls: The regulatory landscape returns to the pre-rule status quo, with state law governing the enforceability. Dozens of states continue to enact and enforce stringent statutes prohibiting noncompetes.
- FTC enforcement actions: The FTC will continue aggressive enforcement against the unfair use of postemployment noncompetes on a case-by-case basis under Section 5 of the FTC Act.
- Public inquiry program: The FTC has launched a public inquiry program “to better understand the scope, prevalence, and effects of employer non-compete agreements, as well as to gather information to inform possible future enforcement actions.”
The State-by-State Puzzle
Although the FTC’s Non-Compete Clause Rule is vacated, noncompetes remain subject to Section 5 of the FTC Act, state statutes, and common law.
Employers must navigate a complex patchwork of state laws. Some states (e.g., California, Minnesota, North Dakota, Oklahoma, Washington, and Wyoming) ban most noncompetes, while others enforce them with significant restrictions or limit them to higher-wage-earning employees. States like Florida and Kansas have enacted legislation providing for a presumption of enforceability for covered noncompete agreements for a set period.
The FTC may investigate or bring claims asserting that a noncompete violates Section 5 of the FTC Act—even if unlawful under state law. State law compliance may still be raised as a defense.
FTC Enforcement Continues
Even without the Non-Compete Clause Rule, noncompetes remain subject to challenge under federal antitrust laws such as the Sherman Act and Section 5 of the FTC Act—especially when used to limit worker mobility in an anticompetitive manner. State attorneys general and private litigants are increasingly active.
The FTC has demonstrated its priority of addressing harmful labor market conduct through case-by-case enforcement and public advocacy. On Sept. 4, 2025, the FTC filed an enforcement action and proposed consent order against Gateway Services Inc., a pet cremation company, alleging that noncompetes imposed on almost all employees, regardless of skill level or job duties, constituted unfair methods of competition that violated Section 5 of the FTC Act.
According to the FTC’s complaint, nearly all of Gateway’s employees were subject to noncompetes that prohibited them from working in the pet cremation service industry anywhere in the U.S. for one year after the termination of their employment. The FTC alleges that these noncompetes were applied “without any individualized consideration of an employee’s role” and affected more than 1,780 employees—including hourly workers such as facility-level laborers at cremation facilities, drivers, and customer service representatives.
Chairman Andrew Ferguson stated the FTC will enforce existing antitrust laws “vigorously against those who demand their employees enter into non-compete agreements so pernicious and so onerous as to make them anticompetitive,” using the Sherman Act’s “rule of reason” analysis (a case-specific reasonableness test). The FTC will shift to a “steady stream” of enforcement actions to define, case by case, the boundaries of lawful noncompetes.
Key Takeaways
Staffing Compliance Checklist
Review and Update Agreements: Audit noncompete and restrictive covenant agreements to ensure they are reasonable, narrowly tailored, and compliant with federal and state law. The FTC is not only reviewing noncompetes but also “other restrictive covenants” that may limit worker mobility. This includes provisions common in client service agreements, such as no-hire, nonsolicitation, and conversion fee clauses between an employer and staffing firm.
Minimize Risk of Enforcement: Overly broad or unjustified noncompetes may result in FTC investigations, reputational harm, and burdensome consent orders.
Consider Alternatives: Consider using less-restrictive alternatives, such as nonsolicitation or confidentiality agreements, to protect legitimate business interests without unduly limiting worker mobility.
Monitor State Developments: States continue to update existing restrictive covenant statutes and enact new prohibitions against noncompetes. Employers with multistate operations should track developments in all relevant jurisdictions.
Audit and Train: Conduct regular audits of your use of noncompetes and related agreements, and train human resources departments and management in best practices.
New Targets Emerge
The FTC has launched a public inquiry program to understand the scope, prevalence, and effects of postemploy-ment noncompetes and to help identify future enforcement targets. The commission encourages employees restricted by noncompete agreements and employers facing hiring difficulties due to a rival’s noncompete agreements to share information. Health care markets are a particular area of concern, with the FTC noting that “harms” from noncompetes with doctors and nurses “may be particularly acute in rural areas.”
On Sept. 10, the FTC issued warning letters to health care employers and staffing firms urging comprehensive reviews of employment agreements—including any noncompetes or other restrictive agreements—to ensure they are appropriately tailored and comply with the law.
The Stakes Going Forward
While the Non-Compete Clause Rule is no longer a threat, the debate over the use and enforceability of noncompetes is far from over. Staffing companies must proactively review and update their noncompete agreements, stay informed about state and federal enforcement trends, and consider alternatives to protect business interests. The FTC’s shift to targeted enforcement means staffing companies—especially those in health care—are under increased scrutiny and should ensure compliance to avoid risks.
Courts and regulators emphasize less-restrictive alternatives, such as nondisclosure agreements, nonsolicitation agreements, and robust trade secret protections. Overly broad or unnecessary noncompetes, nonsolicitation agreements, or other restrictive covenants can still invite legal risk.
, Esq., and , Esq., are partners at Husch Blackwell, an ASA legal sponsor. Wendy Arends, Barbara Grandjean, Chengzhuo He, and Courtney Steelman at Husch Blackwell also contributed to this article. Send feedback on this article to w************@huschblackwell.com or t***********@huschblackwell.com.
