By Danielle 
The U.S. Federal Trade Commission is warning employers — particularly large health-care organizations and staffing firms — to review their noncompete and restrictive covenant agreements to ensure they are not overbroad or unjustifiably restrictive.
FTC Chair Andrew N. Ferguson sent letters to several health-care employers and staffing companies on Sept. 10, urging them to examine their contracts. The agency emphasized concerns about restrictive agreements that could limit worker mobility or patient choice, especially in rural communities where access to care is already limited.
“Enforcement against unreasonable noncompete agreements remains a top priority for the Federal Trade Commission,” Kelse Moen, deputy director of the Bureau of Competition and co-chair of the agency’s Joint Labor Task Force, said in a statement. “We strongly encourage all employers — not just those receiving letters today — to review their contracts closely, to ensure that any restrictions on employee mobility are in full compliance with the law.”
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FTC’s authority to investigate
The FTC said it has authority under Section 5 of the FTC Act to investigate unfair methods of competition, including unjustified or overbroad noncompetes. The warning follows recent enforcement actions, such as an order requiring the nation’s largest pet cremation company to stop enforcing noncompetes, releasing about 1,800 workers. The Commission also launched a public inquiry earlier this year to gather input that could shape future enforcement.
The outreach comes days after the FTC voted 3–1 to withdraw its appeals and accept court rulings that struck down a nationwide rule banning most noncompete agreements. On Sept. 5, the agency moved to dismiss its appeals after a Texas federal court ruled the FTC exceeded its authority in approving the rule, calling it “arbitrary and capricious.”
The American Dental Association noted the FTC’s decision means the proposed ban — which could have affected an estimated 30 million U.S. workers — will not take effect. The ADA advised employers and clinicians to continue monitoring state laws, as many states have enacted their own restrictions on noncompete agreements.
“This does not eliminate the possibility that the FTC could seek to enact a more narrow rule in the future,” said Michael Kim, J.D., ADA associate general counsel.