In August of 2024, I spoke in this column of the Biden Administration’s effort to use the Federal Trade Commission (FTC) to ban most employment noncompete provisions. Those of you with a good memory may recall that I predicted the United States Supreme Court would likely invoke the “major questions doctrine” and rule that such an effort exceeded the authority of the FTC granted by Congress.

What a difference a year makes!

The new administration has made my prediction moot because the Trump FTC has abandoned the Biden approach. However, the Trump Administration appears to possess no intention of allowing rampant, uncontrolled use of noncompetes. Case in point: FTC Chairman Andrew N. Ferguson explained in his September 10, 2025, announcement that the FTC had sent warning letters that “urge recipients to conduct a comprehensive review of their employment agreements—including any noncompetes or other restrictive covenants—to ensure they are appropriately tailored and comply with the law.”

While the agency recently abandoned its attempt to enforce a blanket noncompete ban, this announcement comes just days after the FTC took steps to signal that it will now go after employers in individual enforcement actions. This new enforcement strategy appears to be targeting health care facilities and the staffing firms that serve them, but all must take heed.

In its warning letter, the FTC reminded employers that it has authority under Section 5 of the FTC Act “to investigate unfair methods of competition, including noncompete agreements that are unjustified, overbroad, or otherwise unfair or anticompetitive.” The FTC emphasized that recipients who fail to address problematic provisions risk “civil investigative demands or other enforcement actions.” This warning applies to “no-hire” and “non-solicitation” agreements in addition to the classic “non-compete” agreement.

FTC Chairman Andrew Ferguson also issued a statement advocating for “a steady stream of enforcement actions against” employers’ imposition of unreasonable noncompete agreements. The FTC has launched a public inquiry encouraging “[m]embers of the public including current and former employees restricted by noncompete agreements, and employers facing hiring difficulties due to a rival’s noncompete agreements, to share information about the use of noncompete agreements.”

According to Chairman Ferguson, the FTC will take a “fact-specific approach” when assessing the lawfulness of noncompete agreements, similar to the common-law reasonableness inquiry applied in many state courts. The key overarching question remains whether the restriction stands as no greater than necessary to protect the employer’s legitimate interests and balances those interests against the hardship inflicted on the employee and any potential injury to the public.

With this approach in mind, the FTC signaled that it would continue to pursue employers who use noncompete agreements in ways that:

• apply to low-wage or nonexecutive employees;
• lack a clear business justification;
• restrict employees from working in entire industries or geographic regions; and
• are used across the board, regardless of role or access to sensitive information.

Adding to the fray, state laws also continue to quickly evolve in the direction of limiting noncompetes. A few states (including California, Minnesota, and Oklahoma) have banned noncompete agreements with employees. Thirty-four states and the District of Columbia impose restrictions, such as income thresholds, notice requirements, or industry-specific bans.

New legislation has taken effect this year in Texas, Indiana (as to physician noncompetes), Montana, Oregon, and others, tightening the rules around enforceability.

For now, wise employers will not (again) overreact, but will take steps to maintain the full panoply of options with respect to protecting their valuable intangible workplace property. This may include signing bonus loans or training fee obligations (both hated by the NLRB) as a means of controlling employees, among other creative solutions to a continuing serious situation.

If this advice sounds similar to the advice I gave in 2024, well, it is a complex world….be advised.

If you have questions, please contact David J. Carr or another member of the Workplace Solutions Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.