The Federal Trade Commission (FTC) held a half-day program on January 27, 2026, focused on employee noncompetes. The FTC indicated its intent to pursue prosecution of agreements that violate antitrust or otherwise inappropriately limit employee choice. However, the commission is not reproposing the prior rule banning all noncompetes. If workers have issues, the agency suggests they contact the FTC at noncompete@FTC.gov for assistance.
Looking for Reasonableness
The FTC states that it has adequate existing rules and legal precedent to pursue these issues on behalf of employees without regulatory changes, with a focus on the “reasonableness” of any agreement.
Recognizing that noncompetes can negatively affect employee opportunity and the ability of an employer to expand its business because of a limited staffing pool, the FTC stated it will focus, like earlier court decisions, on reasonableness. Suppression of competition is not considered a reasonable purpose and likely would violate FTC expectations. The definition of competition is fairly broad, including, in part, “competing for workers.”
Case-By-Case
The FTC—like the Equal Employment Opportunity Commission (EEOC) and how it enforces the Americans with Disabilities Act (ADA)—will focus on a case-by-case analysis, further stating that a primary element of any assessment will be whether the agreement’s “anti-competitive effects outweigh its competitive advantages.” The FTC indicated that it may also “blue pencil” an agreement—in other words, use an amendment process.
The FTC will consider all potential violations under a reasonableness standard, which will include the following:
- How the agreement advances pro-competition goals;
- Time and scope of the agreement;
- Employee skill level and access to unique data;
- Specialty training;
- Employee or independent contractor status;
- Relative market power of the employer—noting that larger or unique employers have more market control;
- General business environment; and
- Quasi noncompete effects like no-poaching agreements.
Takeaway
The FTC will continue to take an individualized approach to these issues using existing case law. From a practical perspective, this will place more focus on state law, as many states have enacted much more specific requirements for noncompete agreements or banned noncompetes outright. Those looking to sue, especially for smaller employers, are likely to look first at specific state law for any legal challenge to a noncompete agreement.
Jo Ellen Whitney is an attorney with Dentons Davis Brown in Des Moines. You can reach her at joellen.whitney@dentons.com.