FTC sends letter to staffing firms, others over noncompetes

The Federal Trade Commission sent a letter to several large healthcare companies and staffing firms concerning employee noncompete clauses. It called on the companies to review their employment agreements, including noncompetes, to ensure they comply with the law.

A copy of the letter is online.

The FTC noted healthcare employers and staffing firms’ employment agreements may include unreasonable noncompete clauses for roles such as nurses and physicians.

Such agreements can restrict an employee from working for a company’s competitors for a period of time within a specified geographic area after the worker leaves a firm.

“Enforcement against unreasonable noncompete agreements remains a top priority for the Federal Trade Commission,” said Kelse Moen, Deputy Director of the Bureau of Competition and co-chair of the agency’s Joint Labor Task Force.

Moen also recommended all employers review their employment contracts, not just those receiving letters.

The receipt of letters are not intended to suggest companies have engaged in illegal conduct.

The letter also said that noncompetes can have a particularly harmful effect in healthcare markets where they restrict patients’ choice of who provides their medical care.

“While narrowly tailored noncompetes can serve valid purposes in certain circumstances, available evidence indicates that in practice many employers impose noncompetes without due consideration to whether they are necessary and appropriate under the circumstances, including whether less restrictive alternative contract terms may sufficiently achieve the same procompetitive purposes,” according to the letter.

This announcement follows a decision by the FTC that it would no longer fight a ruling that had halted a national ban on noncompetes. The national ban was put forward by the Biden administration but was halted in August 2024 when a federal judge in Texas issued a summary judgment against it. In October 2024, the FTC had filed an appeal of the ruling.

The FTC also recently launched a public inquiry on noncompetes.