FTC Continues to Prohibit Non-Compete Agreements

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4/28/2026

Employers may be under the impression that non-compete agreements are not illegal, or that the enforceability of such agreements may be limited only under state or local law, or that the federal government is not actively seeking to prohibit their use.  All of those impressions – while perhaps justified – are wrong.  Within the past few weeks, the Federal Trade Commission (FTC) published a proposed order against a nation-wide pest control company, Rollins, Inc., to cease requiring all of its employees (other than its directors, officers and senior managers) to enter into non-compete agreements and also issued letters to thirteen other large pest control companies warning them not to require all their employees to enter into non-compete agreements.

The misimpression arises from the FTC’s failed efforts in 2023 to adopt a uniform regulation generally limiting the enforceability of non-compete agreements except in certain limited circumstances.  While the FTC has abandoned that one-size-fits-all approach, it is actively investigating individual employers and assessing whether the use of non-competes is “unjustified, overbroad, or otherwise unfair or anticompetitive.”  As the Chairman of the FTC explained in a statement that accompanied the proposed order against Rollins, Inc., an “indiscriminate ‘general policy’ approach of requiring every single worker to sign a noncompete agreement irrespective of the worker’s position or responsibilities cries out for scrutiny under the antitrust laws.”

Employers should take the opportunity to reassess their non-compete practices.  Protecting legitimate business interests, particularly in the context of a corporate transaction or with respect to employees who have access to non-public, competitive information, will almost always be justified.  On the other hand, rotely requiring all employees to sign non-competes, without any independent justification to protect confidential information, will invite scrutiny.

For more information about the FTC’s actions against non-competes and for legal guidance about structuring a defensible non-compete program, please contact:

Jay Sabin, Esq., Member, Labor and Employment Practice at 917.596.8987 or jsabin@bracheichler.com

*This is intended to provide general information, not legal advice. Please contact the authors if you need specific advice.

Jay Sabin

Member
Labor and Employment, Litigation, Cannabis Industry

917.596.8987 · 973.618.5907 Fax

Related Practices:   Labor and Employment

Related Attorney:   Jay Sabin