Employment Law Report
Trump’s FTC Refocuses on Non-Compete Agreements
Written by Tyson Gorman with Assistance from Drayden Burton
Earlier this month, the Federal Trade Commission (“FTC”) announced a significant step in its efforts to scrutinize the use of non-compete agreements in the workplace. Until now, it was unclear how the second Trump administration would approach non-compete agreements. Now, it is clear that the new administration is not going to simply ignore the scrutiny of non-compete agreements that spawned during the Biden administration. The FTC has made clear that it would not be pulling back on oversight of non-compete agreements, nor would they be giving such agreements blanket approval.
On September 4th, 2025, the FTC ordered Gateway Services (“Gateway”), the country’s largest pet cremation company, to stop enforcing non-compete agreements against its 1,800 employees. In a complaint filed against Gateway and its subsidiary, the FTC alleges that Gateway imposed non-compete agreements on almost all of its employees, which prohibited them from working in the pet cremation service industry anywhere in the U.S. for one year after leaving Gateway. Specifically, the FTC alleges that Gateway’s use of non-compete agreements was applied without any consideration of the employee’s role (targeting even hourly workers and facility-level laborers) and that Gateway had an anti-competitive motivation in creating the agreements. The complaint includes communication from Gateway regarding non-compete agreements with salespeople: “In fact, if they are that good, there’s more of a reason to get the non-compete/nonsolicit because that risk will always be there. At some point, we’ll have to deal with the competitive concerns which will cost $ [sic].” Further, the FTC’s complaint claims that Gateway’s non-compete agreements are anticompetitive because they put employees in a worse position to negotiate for better terms of their employment and denies them job access, and that these factors combine to create lower wages, reduced benefits, and less favorable working conditions. The FTC sees such agreements, at least in this context, to be a violation of federal law, and that concern is what drove them to this action.
The FTC proposed a consent order, a type of settlement agreement where a company agrees with an agency to abide by certain rules or restrictions without admitting wrongdoing, which would require Gateway to cease the enforcement of any existing non-compete agreements and would prohibit the creation of any new non-compete agreements by Gateway. In a press release following the FTC’s action, the Deputy Director of the Bureau of Competition remarked: “The Trump-Vance FTC will never stop fighting for American workers. Rest assured: today’s action will not be the last.”
What does this mean for businesses?
For businesses, the message is that non-competes are disfavored by the current administration. However, such agreements can still be workable in certain contexts. Any non-compete agreements with terms that are overly broad, indiscriminate with regard to role, or imposed without legitimate business justification could attract scrutiny. The FTC’s complaint against Gateway shows that it intends to focus on agreements that appear designed to limit competition rather than protect the genuine interest of employers.
This action is a reminder to all businesses: to remain compliant with federal law and avoid costly litigation, employers should remember to review the language of any existing non-compete agreements to ensure their terms are not anti-competitive in nature.
If your organization hasn’t reviewed its non-compete agreements, now is the time.
