FTC Signals Enforcement on Noncompete Agreements

The FTC has announced a more aggressive enforcement posture on employment restrictive covenants. Although it has formally abandoned a proposed nationwide noncompete ban, the FTC is unequivocal that robust, case-by-case enforcement, anchored in traditional antitrust principles, will drive policy going forward. The FTC will act where noncompetes lack legitimate, procompetitive justification or are not narrowly tailored to protect bona fide interests such as trade secrets, training investments, or the sale of a business.

FTC officials say they are reviewing significant public submissions that describe how noncompetes in healthcare, particularly those involving providers, limit patient access, restrict physician mobility, and exacerbate shortages in rural and specialty markets. The Commission also noted that the rationales for confidentiality and patient data protection are often insufficient, as HIPAA and other regimes already address those concerns.

Based on the current FTC position:

• Rulemaking is off the table, but enforcement is ramping up: the FTC will pursue unjustified noncompetes under its existing antitrust authority.

• Justifications for noncompetes must be real and specific. Generalized concerns about competition or retention are not enough.

• Narrow tailoring is essential.

• Healthcare is a priority sector, with concerns about patient access, rural shortages, and high barriers to entry for specialist practices.

• Alternatives matter: the FTC will scrutinize whether NDAs, non-solicitation provisions, or fixed-term contracts could address the same goal without suppressing mobility.