On September 10, 2025, the Federal Trade Commission (“FTC”) issued a press release announcing that letters were sent to health systems and health care staffing companies warning against the use of “unreasonable” non-compete clauses or other restrictive covenants in their employment agreements. The letters also strongly suggest that recipients conduct a review of their employment agreements to ensure they comply with applicable laws. Though on September 5, 2025, the FTC voted to withdraw from its defense of the Biden-era administration’s nationwide, broad non-compete ban, the letters signal that the FTC is still interested in enforcing the antitrust laws against health care entities that use unreasonable non-compete agreements and unreasonable restrictive covenants.
Background
In April 2024, the FTC under the Biden administration announced a rule banning most companies from entering into or enforcing non-compete clauses. As reported here, in August 2024, a federal judge in the Northern District of Texas issued a nationwide order in the Ryan, LLC v. FTC lawsuit holding as unlawful and setting aside the FTC’s non-compete ban. The Biden administration FTC quickly appealed that ruling, but the FTC under the Trump administration has since moved to dismiss its appeal, characterizing the Biden-era rule as a “blanket, nationwide ban that exceeded the Commission’s regulatory power.” The Fifth Circuit Court of Appeals granted the FTC’s motion and dismissed the appeal on September 8, 2025.
Despite this action, the FTC clearly remains interested in enforcing the antitrust laws against what it considers to be “unreasonable” non-compete clauses and restrictive covenants, as evidenced by the proactive steps it has taken under the new administration.
Specifically, in February 2025, the FTC launched a Joint Labor Task Force to Protect American Workers, designed to root out and prosecute deceptive, unfair and anticompetitive labor-market practices that harm American workers. More recently, on September 4, 2025, the FTC issued a request for public comments to better understand the scope and effect of non-compete clauses, gathering information to inform its possible future enforcement actions. This request for information specifically highlights the FTC’s concerns about non-compete agreements and restrictive covenants in health care markets, stating that they limit employment options for nurses and physicians, thus restricting patients’ choices for their medical care, especially in rural areas.
FTC’s Press Release and Related Letters Target the Health Care Industry
Similar to the request for public comments, the press release and its associated template letter emphasize the FTC’s concerns with unreasonable non-compete clauses and restrictive covenants in employment contracts for “vital” health care roles such as nurses, physicians and other medical professionals. Though the list of companies receiving the letters is not public knowledge, the letters were specifically targeted towards health care employers and staffing companies.
What Does “Unreasonable” Mean?
The FTC does not expressly define what it considers to be “unreasonable” in its recently released letters, though it references non-competes that are overly broad in duration or geographic scope as problematic. It also suggests employers should give “due consideration” to “whether [non-competes] are necessary and appropriate under the circumstances, including whether less restrictive alternative contract terms may sufficiently achieve the same procompetitive purposes.” The FTC further suggests that non-competes may be altogether inappropriate “for certain roles,” perhaps referring to lower-level or lower-wage-earning employees.
FTC to Heath Care Employers: Audit Your Employment Agreements
The letters sent on September 10, 2025, urge health care employers and staffing agencies to “conduct a comprehensive review” of their employment agreements, especially those with non-competes or other restrictive covenants, to “ensure they are appropriately tailored and comply with the law.” The press release and letter remind employers that the FTC has the authority under § 5 of the FTC Act to investigate unfair methods of competition, including non-compete agreements that are unjustified, overbroad or otherwise unfair or anticompetitive. Note that although the Biden-era rule specifically targeted non-competition restrictions, the FTC’s September 10, 2025, press release and related letters are broader in scope, given that they also reference “other restrictive agreements[,]” which would cover, for example, employee and client/patient non-solicitation restrictions. The FTC and state legislatures alike have been—and continue to be—somewhat vague and imprecise regarding their use of the generic phrase “non-compete agreements.”
Does FTC Have Jurisdiction Over Non-Profit Employers?
It should be noted that § 5 of the FTC Act only applies to “corporations organized for profit.” Historically, non-profit organizations, including non-profit hospitals and health care systems, have fallen outside the purview of the FTC’s jurisdiction under the FTC Act. However, when the final rule banning non-competes was released in April 2024, FTC commissioners remarked that some non-profits could be subject to that ban. For example, if entities claiming tax-exempt status are structured and operated to generate profits, they may still be subject to the FTC Act. Thus, non-profit organizations, especially those in the health care industry, should still proceed with caution when utilizing non-compete clauses and restrictive covenants in their contracts.
Practical Takeaways
- Though the FTC’s complete ban on non-compete clauses is now extinct, the FTC clearly remains interested in investigating and stopping what it may consider to be unreasonable non-compete clauses and restrictive covenants in contracts, especially in health care.
- The FTC seems particularly concerned with non-compete clauses and restrictive covenants in contracts with physicians and nurses, as well as lower-level or lower-wage-earning employees.
- Non-compete clauses and restrictive covenants for nurses will likely be considered problematic, and non-compete clauses and restrictive covenants for physicians will need to be very narrowly tailored and necessary to serve a valid business purpose.
- As recommended by the FTC’s letters, health systems and other health care companies should consider conducting a “non-compete clause audit” of their various contracts to understand the types and breadth of restrictive employment clauses used in their contracts, as well as what categories of employees have employment non-compete clauses and restrictive covenants in their contracts.
- For contracts that contain non-compete clauses and restrictive covenants, companies should ensure they are appropriate in time, geographic scope and the scope of services restricted.
- Separate from FTC enforcement, dozens of states have issued laws governing non-competes and restrictive covenants, many of which specifically target the health care industry. Health care employers must stay abreast of these laws applicable to their employee populations.
- While non-profit hospitals and health systems likely have a good argument that § 5 of the FTC Act does not apply to them, there is no hard and fast rule stating that is the case. As such, non-profits should proceed with caution when utilizing non-compete clauses and restrictive covenants in their contracts.
Hall Render continues to monitor and watch for developments in this area and will provide additional guidance and analysis on a rolling basis. If you have any questions or would like additional information about this topic, please contact:
- Kevin Stella at (317) 977-1426 or kstella@hallrender.com;
- Michael Greer at (317) 977-1493 or mgreer@hallrender.com;
- Dana Stutzman at (317) 977-1425 or dstutzman@hallrender.com;
- Jonathan Bumgarner at (317) 977-1474 or jbumgarner@hallrender.com;
- Hannah Clarke at (317) 429-3615 or hclarke@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
