The Trump FTC Takes New Action Against Non-Competes, While Abandoning Defense of the Biden-Era Non-Compete Clause Rule

Alerts

September 12, 2025

Demonstrating its focus on challenging non-competes through case-by-case enforcement, the Federal Trade Commission (FTC) recently undertook a series of actions. It announced a consent decree requiring Gateway Memorial Pet Services (Gateway), the largest pet cremation business in the United States, to immediately cease enforcement of non-compete agreements that the FTC alleged “limit [employee] job mobility and the ability to negotiate better wages and benefits."¹ Along with that action, the FTC also issued a broad Request for Information (“RFI”), inviting members of the public to provide information on non-compete agreements that they themselves may be subject to or have knowledge regarding so the FTC can investigate further and bring enforcement action as appropriate. The following day, the FTC announced it would abandon its appeals in Ryan, LLC v. FTC, No. 24-10951 (5th Cir.), and Properties of the Villages v. FTC, No. 24-13102 (11th Cir.), and to accede to the order in Ryan setting aside the Biden-era Non-Compete Clause Rule.

While the Non-Compete Clause Rule is no longer in effect, these actions signal that the FTC will continue to investigate and challenge anticompetitive employee non-compete agreements on a case-by-case basis. As FTC Chair Andrew Ferguson stated, “[t]he failure of the Biden Commission’s rule does not mean that employers are free to impose non-compete agreements willy-nilly."² Rather, “the Trump-Vance Commission will act as a cop on the beat, enforcing the antitrust laws against unlawful non-compete agreements to protect American workers, rather than trying to legislate them away."³

Further reinforcing the FTC’s focus on eliminating potentially anti-competitive non-competes, Chair Ferguson subsequently sent letters to several large healthcare employers and staffing agencies urging them to “conduct a comprehensive review of their employment agreements—including any non-competes or other restrictive agreements—to ensure they are appropriately tailored and comply with the law.”⁴ In the press release announcing the letters, the FTC “encourage[s] all employers—not just those receiving letters today—to review their contracts closely, to ensure that any restrictions on employee mobility are in full compliance with the law.”⁵

In light of this series of actions, employers should ensure that any existing non-compete agreements are narrowly tailored to comply with the antitrust laws as articulated by the FTC.

Key Takeaways

To avoid the recent increase in scrutiny by the FTC, employers should consider whether any existing non-competes include terms that could raise antitrust concerns, such as:

Indiscriminate Application. Non-competes should not apply equally to all employees of a company but should instead be applied narrowly to a select group of employees such as equity holders, very senior managers, and those with unique access to confidential information.
Overly broad duration, scope, and purpose. Non-competes that last longer than two years, that go significantly beyond an employer’s current geographic operations, or cover responsibilities that the employee did not have at the employer, may be more closely scrutinized.
Alternatives. Consider whether a non-solicitation agreement, non-disclosure agreement or intellectual-property protection would provide a less restrictive means of accomplishing the same goal as the non-compete.

Chair Ferguson has also expressed an interest in service contracts that limit worker mobility such as no-hire agreements between an employer service provider and its customer.⁴ Service contracts that restrict a customer's ability to hire should also be reviewed to ensure compliance with the above takeaways.

The Complaint and Proposed Settlement

The FTC alleges that Gateway, the largest pet cremation service company in the United States, with 1,992 U.S.-based employees and over 100 locations, adopted a non-compete policy in 2019, that covered all newly hired employees, regardless of salary or responsibility. These agreements prohibited Gateway employees from working in the pet cremation service industry anywhere in the U.S. for one year following the conclusion of employment with Gateway—including in cases of employee termination.

Chair Ferguson issued a statement⁵ (joined by Commissioner Melissa Holyoak) in which he outlined the “fact-specific approach and considerations that govern the Commission’s evaluation of noncompete agreement.”⁶ Commissioner Slaughter dissented.

Factors Supporting Gateway Enforcement

Chair Ferguson notes that Gateway had a history of using non-compete agreements defensively in response to perceived competitive threats.

For example, Gateway allegedly responded to the entry of a competing pet cremation business by executing non-compete agreements with employees not already subject to such agreements.
Gateway would also require non-competes even in areas where Gateway intended to shutter a location, and it often demanded non-competes from recently acquired employees as part of acquisitions.

Gateway non-compete agreements applied indiscriminately.
The non-competes applied to all employees hired after 2019, regardless of title or compensation level. For example, Gateway’s non-compete agreements applied equally to drivers who pick up deceased pets, crematory workers who process ashes and prepare paw print mementos, and corporate executives.
These operational workers are essential for pet crematory operations, but their roles are not strategic, nor do they require significant advanced education or specialized knowledge that may otherwise justify a non-compete. Further, the non-competes were broad in geographic scope and “effectively require[d] workers to exit the pet cremation industry within the United States entirely for a year.”

The FTC concluded that together these elements of the non-competes limited worker mobility and employees’ negotiating leverage and created high barriers for employees seeking to open their own pet cremation business.

To alleviate the anticompetitive concerns of the non-compete agreements, the Proposed Consent Order requires that:

Gateway is prohibited from entering into, maintaining, or enforcing non-compete agreements, with the exception of non-competes for directors, officers, or senior employees that hold equity-based interests in Gateway;
Gateway must post a clear notice to all relevant employees and contractors stating they are not subject to a non-compete agreement, and;
Gateway cannot prohibit relevant employees and contractors from soliciting any customers of Gateway, except where the Covered Employee provided service in the last 12 months of their employment with Gateway.

Key Takeaways from Commissioner Rebecca Slaughter’s Dissenting Statement

While Commissioner Slaughter⁷ agreed with the majority’s decision to ban Gateway from using non-compete agreements, she dissented on the ground that it failed to address “structural problems underlying the market."⁸

Noting that private-equity owned Gateway “rolls up smaller providers”⁹ through serial acquisitions, Commissioner Slaughter argued that “with fewer pet aftercare competitors, Gateway is able to exert more control over the options and prices pet owners pay for services in their time of need; and over the employment options, pay, and working conditions available to workers.”¹⁰ Asserting that this underlying market structure enables Gateway to impose non-competes, Commissioner Slaughter concluded that the consent does not go far enough to address the problem.

Commissioner Slaughter also disagreed that individual enforcement action is sufficient to curtail anticompetitive employee non-compete agreements, noting that “one-off enforcement is no substitute for the FTC’s meaningful, marketwide non-compete rule that will protect workers across the country."¹¹

The FTC Is Looking for Additional Enforcement Targets

Concurrent with the Gateway consent announcement, the FTC launched an RFI on non-competes.¹² The RFI, facilitated by the FTC’s Joint Labor Task Force, launched earlier this year, and designed to “root[] out and prosecut[e] deceptive, unfair, and anticompetitive labor-market practices that harm American workers,"¹³ encourages members of the public to submit comments by November 3, 2025, regarding “information about the use of non-compete agreements.”¹⁴ In the press release announcing the RFI, Kelse Moen, Deputy Director of the Bureau of Competition and co-chair of the agency’s Joint Labor Task Force states, “We are asking the public to help shine a light on unfair and anticompetitive agreements…. Unreasonable non-compete agreements have proliferated for too long in the dark. With the assistance of the employees and workers most burdened by them, the Trump-Vance FTC intends to uproot the worst offenders and restore fairness to the American labor market.”¹⁵ The FTC is actively seeking assistance in identifying employers for potential enforcement action–signaling a more targeted enforcement priority.

Abandoning the Defense of the Non-Compete Clause Rule

Relatedly, Chair Ferguson also announced that the FTC had withdrawn its appeals to two cases in which the court found that the FTC lacked statutory authority to promulgate a broad non-compete rule.¹⁶

In his statement, Chair Ferguson (joined by Commissioner Holyoak)¹⁷ reiterated his belief that the rule proposed by the Biden Commission was illegal. He further stated that the Trump-Vance Commission, instead of defending the rule, will “protect American workers by doing what Congress told us to do—patrolling our markets for specific anticompetitive conduct that hurts American consumers and workers, and taking bad actors to court."¹⁸

Commissioner Meador issued a separate statement¹⁹ concurring with the decision to withdraw the appeal and “expound[ing] on the appropriate framework for evaluating non-compete agreements between employees and employers."²⁰Commissioner Meador noted that he “fully support[s] rigorous enforcement against non-compete agreements under both Sections 1 and 2 of the Sherman Act and Section 5 of the FTC Act when the Commission has reason to believe the law is violated."²¹ He offered a list of non-exhaustive factors he believes the FTC should consider when evaluating the legality of employee non-compete agreements, including:

Likelihood of Free Riding: Is the non-compete protecting an employer’s investment in its employees training and knowledge sharing?
Availability of Less Restrictive Alternatives: Would non-disclosure agreements, customer non-solicitation clauses or other narrower restraints be a suitable alternative to a more restrictive non-compete agreement?
Scope and Duration Analysis: Is the geographic scope, duration, and field of employment narrowly tailored to the circumstances?
Market Power: Does the firm imposing the non-compete have significant market power?
Evidence of Economic Effects: Does the non-compete act as a barrier to entry or effectively reduce labor mobility?

Commissioner Meador asserted that a framework that “balances the procompetitive justifications of non-competes against their anticompetitive and adverse economic potential while aiming to both address administrability concerns and provide future guidance to the business community”²² is the best approach.

Unsurprisingly, Commissioner Slaughter stated she would not have withdrawn the appeals. She charged the Trump-Vance FTC with “throw[ing] in the towel on years of work by the agency to protect workers from draconian non-compete agreements that lower wages, trap workers in abusive jobs, and even inhibit new business formation,”²³ highlighting that of the “26,000 comments on the rulemaking to ban non-competes proposed under Chair Khan; 25,000 of those comments supported a categorical ban.”²⁴ Commissioner Slaughter further accused the majority of “choosing the side of controlling bosses over American workers” in abandoning the appeal. In short, Commissioner Slaughter believes that a complete prohibition on employee non-compete agreements is the most pro-competitive option while one-off enforcement alone is insufficient.

Non-Compete Enforcement Is Here to Stay

While the prior administration’s non-compete rule may be in the rearview mirror, Commission attention to anticompetitive non-competes has not abated. In these actions, the FTC has made it clear that companies utilizing non-competes in employee agreements must ensure the non-compete serves a valid purpose, that the purpose could not have been achieved through a less restrictive means, and the non-compete is properly tailored in terms of geographic scope and employees covered.

If you have any questions about how these recent antitrust enforcement trends could affect your company, do not hesitate to reach out to Maureen Ohlhausen, Jamillia Ferris, Michelle Yost Hale, Matthew McDonald, Taylor Owings, or any member of Wilson Sonsini’s Antitrust and Competition practice.

[1] Press Release, Fed. Trade Comm’n, FTC Takes Action to Protect Workers from Noncompete Agreements, available at https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-takes-action-protect-workers-noncompete-agreements.

[2] Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa Holyoak In the Matter of Gateway Pet Memorial Services, available at https://www.ftc.gov/system/files/ftc_gov/pdf/gateway-ferguson-holyoak-statement-2025.09.04.pdf.

[3] Id.

[4] Press Release, Fed. Trade Comm’n, FTC Chairman Ferguson Issues Noncompete Warning Letters to Healthcare Employers and Staffing Companies, available at https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-chairman-ferguson-issues-noncompete-warning-letters-healthcare-employers-staffing-companies

5] Id.

[6] Concurring Statement of Commissioner Andrew N. Ferguson Joined by Commissioner Melissa Holyoak In the Matter of Planned Building Services, Inc., available at https://www.ftc.gov/system/files/ftc_gov/pdf/2410029-planned-building-ferguson-concurrence-redacted.pdf; Dissenting Statement of Commissioner Andrew N. Ferguson In the Matter of Guardian Service Industries, Inc., available at https://www.ftc.gov/system/files/ftc_gov/pdf/guardian-ferguson-dissenting-statement-final.pdf.

[7] Id.

[8] Id.

[9] On March 18, 2025, President Trump fired Commissioner Slaughter, but she was briefly reinstated by the United States District Court for the District of Columbia in July 2025. However, on September 8, 2025, Chief Justice Roberts stayed the order reinstating Commissioner Slaughter and at this time she is no longer acting as Commissioner pending full resolution of the case at the Supreme Court. See, Order Donald J. Trump, President of the United States, et al., Applicants v. Rebecca Kelly Slaughter, et al., available at https://www.supremecourt.gov/orders/courtorders/090825zr_4f15.pdf.

[10] Dissenting Statement of Commissioner Rebecca Kelly Slaughter Regarding Gateway Pet Memorial Services/West Coast, available at https://www.ftc.gov/system/files/ftc_gov/pdf/rks-statement-gateway.pdf.

[11] Id.

[12] Id.

[13] Id.

[14] Press Release, Fed. Trade Comm’n, FTC Issues Request for Information on Employee Noncompete Agreements (Sept. 4, 2025), available at https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-issues-request-information-employee-noncompete-agreements.

[15] Id.

[16] Id.

[17] Id.

[18] See, Ryan, LLC v. FTC, No. 24-10951 (5th Cir.) and Properties of the Villages v. FTC, No. 24-13102 (11th Cir.).

[19] Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa Holyoak Regarding Ryan, LLC v. FTC, available at https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-holyoak-statement-re-noncompete-acceding-vacatur.pdf.

[20] Id.

[21] Concurring Statement of Commissioner Mark R. Meador In the Matter of Non-Compete Clauses, available at https://www.ftc.gov/system/files/ftc_gov/pdf/meador-statement-noncompete-agreements-9.5.25.pdf.

[22] Id.