The Federal Trade Commission (FTC) has once again signaled that it is ramping up scrutiny of noncompete agreements — this time with a pointed message to health care employers and staffing firms.

On September 10, FTC Chair Andrew Ferguson issued formal warning letters to several large companies in the health care sector, urging them to review their use of noncompete clauses and other post-employment restrictions. According to the FTC’s press release, the agency is concerned that such agreements may unlawfully restrict worker mobility and suppress competition, particularly in sectors like health care where staffing shortages already pose significant challenges.

Despite the latest announcement’s health care focus, it is becoming increasingly clear for a broader swath of employers that noncompetes are under fire from the FTC. These post-employment agreements should be carefully reassessed, or employers should consider other alternatives.

Targeted Warnings Part of Broader Trend on Noncompetes

These warning letters are part of a broader trend, as we detailed in a previous client alert. Just days earlier, the FTC filed a complaint against a major employer and launched a public inquiry into noncompete practices across industries. These moves reflect the agency’s shift from pursuing a broad federal ban to targeting individual employers through case-by-case enforcement.

Health Care in the Crosshairs

The FTC’s letters to health care employers come amid growing concern about how restrictive covenants may limit access to care. The agency noted that employers should carefully review their employment contracts to ensure compliance with antitrust laws and to avoid overbroad restrictions that may violate workers' rights or stifle competition.

This is not the first time the health care industry has faced such scrutiny. Noncompete agreements involving physicians, nurses, and other clinical staff are particularly controversial due to their potential impact on patient access and public health.

What Employers Should Consider Now

Whether or not your organization received a warning letter, the FTC’s message is clear: overbroad or poorly tailored noncompetes are in the agency’s crosshairs. Employers should act now to mitigate risk.

Here are some practical takeaways:

• Conduct a compliance review: Reassess your current employment agreements, particularly those involving non-exempt or hourly workers. Agreements should be narrowly tailored to protect legitimate business interests, such as trade secrets or client relationships.
• Consider alternatives: In many cases, confidentiality or non-solicitation agreements can offer adequate protection with significantly lower legal risk.
• Tailor restrictions appropriately: Noncompetes should be specific in duration, geographic scope, and functional role. A one-size-fits-all agreement is increasingly risky under federal and state scrutiny.
• Monitor ongoing enforcement: The FTC’s strategy is evolving. Employers should track enforcement trends and legal developments, particularly in industries like health care and tech, where scrutiny is most intense.
• Review state law variations: Even as the FTC takes action at the federal level, states continue to diverge on their approach to noncompetes. Stay up to date with local laws, especially if your workforce spans multiple jurisdictions.

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