This past week marked the end to the Federal Trade Commission’s (FTC’s) controversial noncompete rule, with the FTC shifting its focus to individual enforcement actions “to root[ ] out” what it considers to be unfair and anticompetitive noncompete practices by employers.
In August 2024, a few weeks before the FTC noncompete rule was set to become effective, federal judges issued decisions in Ryan, LLC v. FTC and Properties of the Villages v. FTC, blocking the FTC from enforcing the rule. The FTC appealed both rulings.
On September 5, 2025, the FTC voted 3-1 to withdraw its appeals of the rulings in Ryan, LLC v. FTC and Properties of the Villages v. FTC.
In a statement joined by FTC Commissioner Melissa Holyoak, FTC Chairman Andrew Ferguson supported withdrawing the appeals after criticizing the noncompete rule as “unlawful six ways from Sunday” while still vowing to “enforce the antitrust laws aggressively against noncompete agreements.” In a concurring statement, FTC Commissioner Mark Meador similarly supported withdrawing the appeals after criticizing the noncompete rule as “substantially overbroad and an ill-advised use of Commission resources” and proposing a framework for evaluating noncompete covenants. FTC Commissioner Kelly Slaughter, in turn, dissented to withdrawing the appeals, stating that the noncompete rule “deserves a vigorous defense in court.”
With the FTC’s decision to withdraw its appeals in Ryan and Properties of the Villages, there no longer remains any vestige of the Biden-era noncompete rule.
THE FTC ENFORCEMENT ACTION AGAINST GATEWAY SERVICES
The day before the FTC voluntarily dismissed its appeals, the FTC initiated an individual enforcement action against pet cremation company Gateway Services, Inc. and its subsidiary to stop enforcing the noncompete agreements against their employees.
In its complaint, the FTC alleges that Gateway requires almost all employees to sign noncompete agreements prohibiting employees from working in the pet cremation services industry anywhere in the United States for one year after leaving Gateway. The FTC contends that Gateway can protect any legitimate business interests through significantly less restrictive means. With a carveout for noncompete covenants entered into with certain senior employees or in connection with sales of any business, the FTC issued a proposed consent order that would require Gateway to, among other things, immediately stop enforcing all existing noncompetes.
AN INCREASE IN INDIVIDUAL ENFORCEMENT ACTIONS
The FTC’s enforcement action against Gateway is likely the first of many enforcement actions to be brought with Ferguson as the chairman of the FTC. The same day that the FTC commenced its enforcement action against Gateway, Ferguson issued a joint statement with Commissioner Holyoak highlighting the FTC’s “commitment to enforcing the law vigorously against those who demand their employees enter into noncompete agreements so pernicious and so onerous as to make them anticompetitive.” Signaling the FTC’s path forward, Chairman Ferguson criticized the amount of resources the prior administration expended in promulgating and defending the noncompete rule and stated that such resources should have been “expended on investigating and litigating specific cases that could have protected thousands of workers.”
Ferguson further stated that the “rule’s vacatur does not prevent the Commission from doing what it should have been doing all along—addressing noncompete agreements through enforcement actions against companies that misuse them in violation of the law.” In making clear that the FTC intends to use enforcement actions on a go-forward basis, Chairman Ferguson stated that the FTC “will act as a cop on the beat, enforcing the antitrust laws against unlawful noncompete agreements to protect American workers, rather than trying to legislate them away.”
THE FTC INVITES PUBLIC COMMENT ON EMPLOYER NONCOMPETE PRACTICES
Also on September 4, 2025, the FTC issued a press release requesting information from the public to “better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.”
The FTC made clear that it “remains committed to rooting out unfair and anticompetitive conduct . . . through case-by-case enforcement and public advocacy,” while inviting the public (including “rival employers”) to inform the FTC of, among other things, the names of employers using noncompete agreements; the stated reasons for doing so; the details around the roles, job functions, and salaries of restricted employees; the terms of noncompetes; any perceived harm to current or former employees; and any potential loss to innovation. Several questions focus on the healthcare sector, including soliciting information about noncompetes that affect the availability, quality, or cost of healthcare services or make it more difficult for providers of healthcare services to hire physicians, nurses, or other professionals.
The FTC’s public comment window closes on November 3, 2025 at 11:59 pm ET.
BIPARTISAN BILL THAT WOULD BAN MOST NONCOMPETES
The FTC’s recent press releases come on the heels of a bipartisan initiative earlier this summer to ban most noncompete agreements via legislation. On June 11, 2025, US Senators Todd Young, Kevin Cramer, and Tim Kaine submitted a bipartisan bill called Senate Bill 2031, titled the Workforce Mobility Act of 2025 (SB 2031).
SB 2031 seeks to prohibit certain noncompete agreements in order to enhance worker mobility and stimulate wage growth. As written, SB 2031 would prohibit employers from entering into, enforcing, or attempting to enforce noncompete agreements except in limited exceptions, such as the sale of a business or for certain senior executives who have severance agreements. SB 2031 seeks to empower the US Department of Labor and Federal Trade Commission to enforce its provisions, but it also seeks to create a mechanism for private rights of action and enforcement by state attorneys general. SB 2031 has been referred to the Senate Health, Education, Labor, and Pensions Committee.
NEXT STEPS
Given the shifting landscape surrounding noncompete agreements, it remains critical to consult experienced legal counsel to ensure that a business’s noncompete agreements and other restrictive covenants remain compliant with federal and state law, particularly if a business operates in multiple states.
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