The federal landscape governing employee noncompete agreements has entered a new and less predictable phase. Following the August 2024 district court order vacating the Federal…
The federal landscape governing employee noncompete agreements has entered a new and less predictable phase. Following the August 2024 district court order vacating the Federal Trade Commission's broad Noncompete Rule, the agency has dropped its appeals and abandoned its rulemaking effort in favor of targeted, case-by-case enforcement. For employers who had structured their workforce planning around either the anticipated rule or its subsequent invalidation, the message is clear: reliance on categorical guidance is no longer viable, and individual restrictive covenants now face heightened federal scrutiny.
The FTC's recent enforcement posture illustrates the practical stakes of this shift. In its order against Rollins, Inc., the agency required the company to cease enforcing noncompete agreements covering more than 18,000 employees nationwide. That action signals the FTC's willingness to pursue aggressive scrutiny of overbroad restrictive covenants without waiting for a generally applicable rule, and it suggests that scope, employee classification, and business justification will all be examined closely in future matters.
The agency's focus is not limited to traditional noncompetes. On February 12, 2026, the FTC finalized a consent order with Adamas addressing no-hire agreements between employers. That resolution confirms that labor-market restraints extending beyond the classic employee-employer noncompeteΓÇöincluding agreements among competing businesses not to solicit or hire one another's workersΓÇöremain squarely within the agency's enforcement priorities. Employers using no-hire, no-poach, or similar arrangements should recognize that these instruments face the same scrutiny as more familiar restrictive covenants.
Against this backdrop, proactive review of existing restrictive covenants is prudent. Employers should audit their noncompete, non-solicitation, and no-hire provisions for breadth, duration, geographic reach, and the legitimate business interests they are designed to protect. Documentation supporting the necessity and tailoring of each provision may prove valuable if federal or state regulators inquire. Coordination with state-law developments, which continue to evolve independently, is equally important, as several jurisdictions have imposed their own limits on restrictive employment terms.
This article is provided for general informational purposes only and does not constitute legal advice. Clients facing questions about specific restrictive covenants or enforcement risk should seek tailored counsel regarding their particular circumstances.