Mid-Atlantic Health Law TOPICS

In 2024, the Federal Trade Commission (FTC) promulgated a nationwide rule banning most non-competition agreements. After more than a year of litigation holding up enforcement of the FTC’s rule, the Trump Administration on September 5, 2025, announced that it will dismiss its attempts to overturn the injunctions that ban the enforcement of the rule. 

Surprisingly, however, the FTC also took several actions indicating that the agency will continue to try to curb the use of non-competes, especially in the health care industry. 

New FTC Efforts

On September 4, 2025, the FTC launched a public inquiry “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 inquiry is soliciting comments from the public “to help shine a light on unfair and anticompetitive agreements.” In a statement announcing the inquiry, the FTC acknowledged that “[w]hile noncompete agreements can serve valid purposes in some circumstances, available evidence indicates that they are often subject to abuse” and can lead to unwanted consequences.

The inquiry goes on to state that non-competes “may unjustifiably prevent workers from moving to better jobs, impede new business formation, prevent the shift of labor from over-served to under-served markets, and harm 
rival employers’ ability to compete” leading to “lower worker earnings, lost innovation, higher consumer prices, and overall negative effects on workers’ and consumers’ quality of life.”

At the same time, the FTC announced that it was taking action against the nation’s largest pet cremation business to require it to stop enforcing noncompete agreements with nearly 1,800 workers. The FTC’s complaint alleged that Gateway US Holdings Inc. adopted a policy of requiring non-compete agreements for all newly hired employees, regardless of their position or responsibilities, including low paid drivers, customer service representatives and others.

These agreements typically require that, for one year following the conclusion of employment with Gateway, the employee is prohibited from working in the pet cremation service industry anywhere in the United States. The FTC charged that Gateway’s non-compete agreements were unfair methods of competition in violation of Section 5 of the FTC Act.

Finally, on September 10, 2025, the FTC Chairman, Andrew Feguson, sent warning letters to several large health care employers and staffing firms stating that “[t]he FTC is focusing resources on enforcing Section 5 of the FTC Act against unlawful non-competes, particularly in the healthcare sector.” The letter also contained the directive that “[i]f your company is currently using non-competes that are unfair or anticompetitive under the FTC Act, I strongly encourage you to discontinue them immediately and to notify relevant employees of the discontinuance.”

Danger Ahead

Curbing the use of non-competes in the health care industry has also been the subject of recent legislative efforts in Maryland and the District of Columbia. Accordingly, as the FTC increases targeted enforcement efforts and states enact new laws and tighten current restrictions, the patchwork of non-compete regulation across the country will become more difficult to navigate. Employers, therefore, especially those in the health care industry, should seek legal counsel to ensure their agreements comply with changes in state and federal law.

Charles R. Bacharach
410-576-4169 • cbacharach@gfrlaw.com