FTC Targets Non-Compete Agreements, Again - What Employers Need to Do

By Richard Lehr - Lehr Middlebrooks Vreeland & Thompson, P.C.

September 22, 2025

Under the Biden administration, the Federal Trade Commission attempted to pursue a robust regulatory approach to restrict non-compete agreements. (See our prior posts here, here, here, and here). However, those efforts were derailed in August 2024, when a federal court enjoined the FTC rule (which had tried to outlaw most non-competes). Employers who thought that non-compete agreements would not be an issue with the Trump FTC are forewarned: the FTC will focus on employers whose non-compete agreements, in the FTC’s view, restrict competition and entrepreneurship.

On September 5, 2025, the FTC announced that it filed a complaint against Gateway Services, a national pet cremation company with approximately 1,800 employees across the country who signed non-compete agreements. Beginning in 2019, newly hired Gateway employees were required to sign a non-compete agreement, regardless of their job duties. The affected employees ranged from executives to laborers. The agreements precluded employees from working in the pet cremation industry anywhere in the U.S. for one year. Gateway has over 100 locations serving 17,000 veterinary clinics. According to Daniel Guarnera, Director of the FTC’s Bureau of Competition: “The anti-trust laws protect workers from noncompete agreements that harm competition, including by preventing workers from switching to better-paying jobs or starting their own businesses. We will protect workers by enforcing the laws against anticompetitive noncompetes.”

Employers should consider the following when it comes to non-compete and related agreements:

1. Often the employer’s primary concern is confidentiality of business information and the solicitation of its customers by a former employee. If that is what you really want to protect against, then evaluate if confidentiality, non-disclosure, or non-solicitation agreements could address the concern effectively.

2. Do not over-reach. The Gateway noncompete allegedly prohibits employees from working anywhere in the U.S. for a competing business. Seek only the geographical restriction that’s needed to protect the business, and make sure the time period of the restriction is reasonable as well.

3. Scope the agreements to be proportionate to the employee’s job responsibilities and the employer’s investment. Courts are more likely to enforce a non-compete agreement applied to a sales representative than they will a non-compete agreement applied to a janitor. This is even more true if the sales representative: works from a company-developed virtual rolodex of clients; uses confidential pricing models; and/or received company training in technical information about the product line or in particular sales techniques.

4. Include the agreement as a stand-alone document. If it’s in a handbook with ”employment at-will” and “this handbook is not a contract”-type language, it’s unlikely to be enforceable.

Most states have laws restricting noncompete agreements. Some also limit non-solicitation agreements. Consult with counsel regularly to ensure your agreements limiting your employees’ subsequent employment options comply with the law(s) of the state(s) where they may be enforced.

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