Authors
On January 27, 2026, the Federal Trade Commission (FTC) held a half‑day workshop, “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements,” featuring three panels and separate remarks by Chairman Andrew Ferguson and Commissioner Mark Meador. The key message was unambiguous: the FTC’s hardline stance on non‑compete restrictions remains firmly in place, and the agency will continue to prioritize enforcement in this area.
“If you have a non-compete, you should be prepared to defend it.”
Although the FTC indicated it will not revive the prior broad rulemaking initiative associated with former Chair Lina Khan, it reiterated that it will pursue aggressive, case-by-case enforcement against non‑compete provisions it views as anticompetitive. Chairman Ferguson emphasized reliance on a common‑law, reasonableness framework when assessing restraints, signaling that individual fact patterns will drive outcomes. According to the Chairman, sustained enforcement measures are intended both to deter problematic practices and to foster continued evolution of workable standards of review.
The FTC’s legal framework
The FTC also indicated it will evaluate non-compete provisions using practical factors highlighted in Commissioner Meador’s remarks. When evaluating non-competes, the FTC is looking to these factors:
- Likelihood of freeriding: Whether a departing employee’s move would allow a competitor to appropriate the employer’s investments (for example, training, customer relationships, or R&D) without incurring any costs of its own or compensating the competitor.
- Employee knowledge of proprietary information: The extent to which the employee had access to trade secrets, confidential know how, strategic plans, or other sensitive information that could materially advantage a rival.
- Availability of less restrictive options: Whether legitimate interests could be protected through narrower measures – such as non disclosure agreements, non solicitation covenants, garden leave, or role specific restrictions – rather than a full non compete.
- Scope and duration of the agreement: The geographic, customer, and activity scope and the term of the restraint, with strong indications that durations beyond one to two years are unlikely to be defensible.
- Market power of the employer: The employer’s market position and ability to foreclose competition, with larger employers facing heightened scrutiny where non competes could freeze out new entrants.
- Economic downstream effects: The broader effects on wages, worker mobility, innovation and entry, and customer and patient access.
Low-wage and low-skilled worker focus
The workshop underscored a continued focus on low‑income and low-skilled workers as a priority area for enforcement. The FTC’s emphasis reflects a particular concern where non‑competes may have market‑wide effects beyond any single worker. In the low‑wage context, the FTC highlighted risks to worker mobility and bargaining power, warning that restrictions can depress wages and entrench workers in positions without meaningful alternatives, thereby harming competition and broader economic affordability.
Health care focus
The workshop also underscored a continued focus on the health care sector as a priority area for enforcement. In particular, the FTC expressed concern that non-competes may have market-wide effects in that restraints can limit patient access, disrupt continuity of care, and strain physician relationships. Even as the FTC turns its focus on health care, there remain segments of the industry where support for the status quo is strong. For example, physician group practices frequently defend non‑competes as tools to preserve intra‑group stability, protect investments, and promote cohesive group practice. In addition, non-competes in clinical settings are generally applied to higher-compensation physicians and similarly situated professionals rather than lesser-compensated employees. In this environment, stakeholders in health care should ensure that any use of non‑competes is grounded in clearly articulated, contemporaneously documented business justifications that can be tied to legitimate interests and tailored to the facts of each case.
What employers need to do now
The FTC’s guidance points to a practical imperative: review existing non‑competes with an eye toward defensibility. Broad, one‑size‑fits‑all restrictions are increasingly vulnerable to scrutiny. Employers should adopt a nuanced, role‑specific approach and maintain documentation that explains why a covenant is necessary for certain positions but not others. Documentation should address concrete factors such as investments in employee training or education, exposure to sensitive proprietary or trade secret information, and the risk of targeted competitive harm. Employers should also evaluate less restrictive alternatives – such as non‑solicitation and non‑disclosure agreements – where a full non‑compete may be unnecessary or disallowed. Narrowly tailored, evidence‑backed restraints are more likely to survive scrutiny under a reasonableness standard and to align with the FTC’s stated enforcement priorities.
Client Alert 2026-020