Summary
While the Federal Trade Commission (FTC) quietly let its blanket prohibition against noncompete provisions die, it has recently made a public effort to emphasize case-by-case enforcement against such provisions, especially in the health care sector.
The Upshot
- The Federal Trade Commission earlier this month ended its appeal of a U.S. District Court decision blocking its much-debated nationwide rule barring the use of noncompete provisions.
- The FTC also reemphasized its case-by-case concerns with noncompete provisions in the health care sector with letters to several large health care employers warning against the anticompetitive use of such provisions.
- The FTC also initiated a noncompete “workshop”—scheduled for October 8—to gather information in consideration of future enforcement actions.
The Bottom Line
All health care entities should review and reconsider their use of noncompete provisions to avoid investigations and enforcement actions. The FTC has identified geographic scope, length of time, and the application to nonexecutive employees as key considerations. Ballard Spahr lawyers are available to advise and assist with inquiries from regulators.
In April 2024, the Federal Trade Commission (FTC) issued a final rule prohibiting most noncompete clauses nationwide. The FTC’s rule deemed noncompete clauses a violation of Section 5 of the FTC Act as an “unfair method of competition” and banned such clauses following the effective date. (16 C.F.R. 910) For noncompete provisions existing before the effective date of the rule, the enforcement of such provisions was deemed an unfair method of competition except as to senior executives.
On August 20, 2024, a federal district court issued an order stopping enforcement of the rule. The FTC appealed. During the pending appeal, there was a transition from the Biden administration to the Trump administration, and the membership of the FTC changed with it. On September 5, 2025, the FTC voted 3-1 to dismiss its appeal. The majority stressed that the FTC would focus instead on targeted enforcement actions against specific noncompete activities.
On September 10, 2025, the FTC issued letters to several unidentified health care employers and staffing agencies warning of potential actions against overly broad noncompete provisions. The FTC letters expressed concern about the length and geographic scope of noncompete provisions in the health care industry, particularly for nurses, physicians, and other medical providers. The letters stated that “[n]oncompetes may have particularly harmful effects in health care markets where they can restrict patients’ choices of who provides their medical care—including, critically, in rural areas where medical services are already stretched thin.” The letters concluded with a request for employers and staffing agencies to review their existing provisions and to discontinue unfair or anticompetitive practices.
On September 17, 2025, the FTC further announced that it would host a noncompete “workshop” October 8 as part of its ongoing effort to “highlight the negative impact of noncompete agreements on American workers and put business on notice of its enforcement priorities.” The announcement noted that the FTC is seeking tips from the public to lead to further enforcement actions.
Although the broad prohibition on noncompete clauses appears to have quietly died with the dismissal of the FTC’s appeal, efforts to investigate and enforce the FTC Act against individual companies remain active. All employers in the health care industry should review their existing noncompete provisions and policies to assess risk. The following considerations may apply:
- Whether the provisions have a broad geographic scope, prohibiting employees from working outside areas where the employer plausibly competes;
- Whether the duration exceeds one to two years;
- Whether the provisions include employees of all wages and skill levels or are limited to senior executives;
- Whether less restrictive contractual provisions—such as nondisclosure agreements and customer non-solicitation agreements—may achieve the same result; and
- Whether the employer may be deemed to have “market power” given its size and location.
Ballard Spahr is monitoring the FTC’s approach to noncompete provisions, as well as the approach of state attorneys general. Lawyers in our Antitrust and Competition and Labor and Employment groups are available to advise on the use of such provisions and assist with inquiries from regulators.
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