FTC Targets Noncompete Agreements in the Healthcare Industry

On September 10, 2025, the Federal Trade Commission (“FTC”) sent letters to numerous unidentified healthcare employers and staffing companies warning them about the potential unenforceability of noncompete agreements directed at nurses, physicians, and other medical professionals. In these letters, FTC Chairman Andrew Ferguson noted that the FTC will focus its resources on enforcing Section 5 of the FTC Act with respect to unlawful noncompete agreements, with a specific emphasis on those affecting the healthcare industry.

Importantly, the FTC’s stance on restrictive covenants is not limited to noncompete agreements — the letters also indirectly reference nonsolicitation clauses as potentially subject to FTC enforcement. The FTC has previously taken the position that any restrictive covenant that effectively limits an employee’s ability to earn a living — including overly broad nonsolicitation clauses that prohibit an employee from providing services to an employer’s existing customers or clients — may be unenforceable.

The FTC’s letters further highlight several specific features of concern in restrictive covenants, including overly broad geographic scope, excessive duration, and application to nonexecutive or lower-level employees. The FTC also raised public interest concerns, noting that restrictive covenants in healthcare settings — particularly in rural or underserved areas — may reduce patient access to care and limit provider choice. In addition, the agency signaled that its enforcement analysis may take into account whether the employer holds market power due to its size or geographic dominance, which could amplify the anticompetitive effects of restrictive covenants. While the FTC has abandoned its efforts to outright ban the vast majority of employee noncompete agreements, its position with respect to their enforceability has not changed: employers (especially those in the healthcare sector) must ensure their restrictive covenants are narrowly tailored to protect their legitimate business interests.

On September 17, 2025, the FTC announced an October 8 workshop to address the impact of noncompete agreements and outline its enforcement focus. The agency is also seeking public tips to guide future actions. 

Employers should review their existing employment and restrictive covenant agreements and consult with counsel to determine whether any revisions to those agreements are necessary in light of the increased scrutiny the FTC (and also many states) have placed — and are expected to continue placing — on restrictive covenants.