On September 10, 2025, the Federal Commerce Fee (“FTC”) issued a press launch asserting that letters had been despatched to well being techniques and well being care staffing firms warning towards the usage of “unreasonable” non-compete clauses or different restrictive covenants of their employment agreements. The letters additionally strongly recommend that recipients conduct a evaluate of their employment agreements to make sure they adjust to relevant legal guidelines. Although on September 5, 2025, the FTC voted to withdraw from its protection of the Biden-era administration’s nationwide, broad non-compete ban, the letters sign that the FTC remains to be fascinated by implementing the antitrust legal guidelines towards well being care entities that use unreasonable non-compete agreements and unreasonable restrictive covenants.
Background
In April 2024, the FTC underneath the Biden administration introduced a rule banning most firms from getting into into or implementing non-compete clauses. As reported right here, in August 2024, a federal choose within the Northern District of Texas issued a nationwide order within the Ryan, LLC v. FTC lawsuit holding as illegal and setting apart the FTC’s non-compete ban. The Biden administration FTC rapidly appealed that ruling, however the FTC underneath the Trump administration has since moved to dismiss its enchantment, characterizing the Biden-era rule as a “blanket, nationwide ban that exceeded the Fee’s regulatory energy.” The Fifth Circuit Courtroom of Appeals granted the FTC’s movement and dismissed the enchantment on September 8, 2025.
Regardless of this motion, the FTC clearly stays fascinated by implementing the antitrust legal guidelines towards what it considers to be “unreasonable” non-compete clauses and restrictive covenants, as evidenced by the proactive steps it has taken underneath the brand new administration.
Particularly, in February 2025, the FTC launched a Joint Labor Process Power to Shield American Employees, designed to root out and prosecute misleading, unfair and anticompetitive labor-market practices that hurt American staff. Extra not too long ago, on September 4, 2025, the FTC issued a request for public feedback to raised perceive the scope and impact of non-compete clauses, gathering info to tell its doable future enforcement actions. This request for info particularly highlights the FTC’s considerations about non-compete agreements and restrictive covenants in well being care markets, stating that they restrict employment choices for nurses and physicians, thus proscribing sufferers’ selections for his or her medical care, particularly in rural areas.
FTC’s Press Launch and Associated Letters Goal the Well being Care Business
Much like the request for public feedback, the press launch and its related template letter emphasize the FTC’s considerations with unreasonable non-compete clauses and restrictive covenants in employment contracts for “important” well being care roles corresponding to nurses, physicians and different medical professionals. Although the checklist of firms receiving the letters just isn’t public information, the letters had been particularly focused in direction of well being care employers and staffing firms.
What Does “Unreasonable” Imply?
The FTC doesn’t expressly outline what it considers to be “unreasonable” in its not too long ago launched letters, although it references non-competes which might be overly broad in period or geographic scope as problematic. It additionally suggests employers ought to give “due consideration” to “whether or not [non-competes] are vital and acceptable underneath the circumstances, together with whether or not much less restrictive different contract phrases might sufficiently obtain the identical procompetitive functions.” The FTC additional means that non-competes could also be altogether inappropriate “for sure roles,” maybe referring to lower-level or lower-wage-earning staff.
FTC to Heath Care Employers: Audit Your Employment Agreements
The letters despatched on September 10, 2025, urge well being care employers and staffing businesses to “conduct a complete evaluate” of their employment agreements, particularly these with non-competes or different restrictive covenants, to “guarantee they’re appropriately tailor-made and adjust to the legislation.” The press launch and letter remind employers that the FTC has the authority underneath § 5 of the FTC Act to research unfair strategies of competitors, together with non-compete agreements which might be unjustified, overbroad or in any other case unfair or anticompetitive. Observe that though the Biden-era rule particularly focused non-competition restrictions, the FTC’s September 10, 2025, press launch and associated letters are broader in scope, provided that in addition they reference “different restrictive agreements[,]” which might cowl, for instance, worker and consumer/affected person non-solicitation restrictions. The FTC and state legislatures alike have been—and proceed to be—considerably imprecise and imprecise relating to their use of the generic phrase “non-compete agreements.”
Does FTC Have Jurisdiction Over Non-Revenue Employers?
It must be famous that § 5 of the FTC Act solely applies to “companies organized for revenue.” Traditionally, non-profit organizations, together with non-profit hospitals and well being care techniques, have fallen exterior the purview of the FTC’s jurisdiction underneath the FTC Act. Nevertheless, when the ultimate rule banning non-competes was launched in April 2024, FTC commissioners remarked that some non-profits could possibly be topic to that ban. For instance, if entities claiming tax-exempt standing are structured and operated to generate earnings, they might nonetheless be topic to the FTC Act. Thus, non-profit organizations, particularly these within the well being care business, ought to nonetheless proceed with warning when using non-compete clauses and restrictive covenants of their contracts.
Sensible Takeaways
- Although the FTC’s full ban on non-compete clauses is now extinct, the FTC clearly stays fascinated by investigating and stopping what it might contemplate to be unreasonable non-compete clauses and restrictive covenants in contracts, particularly in well being care.
- The FTC appears significantly involved with non-compete clauses and restrictive covenants in contracts with physicians and nurses, in addition to lower-level or lower-wage-earning staff.
- Non-compete clauses and restrictive covenants for nurses will probably be thought-about problematic, and non-compete clauses and restrictive covenants for physicians will must be very narrowly tailor-made and essential to serve a sound enterprise function.
- As advisable by the FTC’s letters, well being techniques and different well being care firms ought to contemplate conducting a “non-compete clause audit” of their numerous contracts to grasp the categories and breadth of restrictive employment clauses used of their contracts, in addition to what classes of staff have employment non-compete clauses and restrictive covenants of their contracts.
- For contracts that include non-compete clauses and restrictive covenants, firms ought to guarantee they’re acceptable in time, geographic scope and the scope of companies restricted.
- Separate from FTC enforcement, dozens of states have issued legal guidelines governing non-competes and restrictive covenants, lots of which particularly goal the well being care business. Well being care employers should keep abreast of those legal guidelines relevant to their worker populations.
- Whereas non-profit hospitals and well being techniques probably have argument that § 5 of the FTC Act doesn’t apply to them, there is no such thing as a onerous and quick rule stating that’s the case. As such, non-profits ought to proceed with warning when using non-compete clauses and restrictive covenants of their contracts.
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