The federal landscape for noncompete agreements has entered a new phase. Following the November 2024 federal court ruling that vacated the Federal Trade Commission's sweeping…
The federal landscape for noncompete agreements has entered a new phase. Following the November 2024 federal court ruling that vacated the Federal Trade Commission's sweeping nationwide ban on noncompetes, the agency has formally shifted its strategy in 2026. Rather than pursuing a categorical, one-size-fits-all prohibition, the FTC is now advancing its policy objectives through targeted, case-by-case enforcement actions against individual employers. For businesses that rely on restrictive covenants, this development changes the nature of the compliance risk but does not eliminate it.
A recent consent order involving Rollins, Inc., one of the largest pest-control companies in the United States, illustrates the FTC's new approach. Under the terms of the order, Rollins must cease enforcing noncompete agreements covering more than 18,000 of its employees. The action signals that the agency remains willing to pursue prominent employers individually, particularly where noncompete practices are viewed as broadly restrictive of worker mobility. Companies with large or geographically dispersed workforces should recognize that scale alone may attract regulatory attention.
At the same time, it is important to emphasize that noncompete regulation in the United States continues to be governed primarily by state law. Jurisdictions differ significantly in how they treat restrictive covenants, with some states enforcing reasonable agreements, others imposing strict limits based on employee wages or job function, and a smaller group barring most noncompetes outright. As a result, employers cannot look solely to federal developments to guide their practices. Compliance depends on a careful reading of the specific state or states in which each employee works.
Given this dual-track environment, employers should undertake a considered review of their existing agreements and templates. Key steps include confirming that restrictive covenants are narrowly tailored to protect legitimate business interests, assessing enforceability under applicable state law, and monitoring federal enforcement priorities as the FTC continues to develop its case-by-case docket. Human resources, legal, and compliance teams should coordinate to ensure that onboarding and separation practices reflect current standards.
This article is provided for general informational purposes only and does not constitute legal advice. Employers considering the use or enforcement of noncompete agreements should consult qualified counsel for guidance tailored to their specific circumstances and jurisdictions.