By Adam C. Maxwell

In the wake of the FTC’s noncompete rule being set aside,[1] the agency’s April 2026 action against Rollins, Inc. is a clear articulation of its post-rulemaking strategy: the FTC is dismantling noncompete practices it views as unfair methods of competition through targeted enforcement actions and coordinated pressure on industry participants.

The FTC recently ordered Rollins to stop enforcing noncompete agreements covering more than 18,000 workers and required notice to affected employees that those restrictions are void. Rollins had mandated noncompetes across its workforce, including to lower-wage employees without meaningful access to sensitive information. The agreements it used imposed standardized restrictions (approximately a 70-mile radius and two-year post-employment duration), and the company actively enforced those agreements through litigation and cease-and-desist letters.

The Trump-Vance FTC has prioritized policing deceptive, unfair, and anticompetitive labor-market practices, and the FTC’s enforcement posture should not be surprising: Chairman Andrew Ferguson previewed this approach in prepared remarks on January 27, 2026: “If a company wants to execute a noncompete agreement, they better be prepared to defend it.” Absent a categorical ban through rulemaking, it will dismantle noncompetes through case-by-case enforcement under Section 5 of the FTC Act. This recent order signals a sustained and escalating focus in this area, and Employers should expect continued regulatory scrutiny in 2026 and beyond.

Increased Scrutiny Means Increased Business Risk

In this environment, employers can no longer treat noncompetes as a default protection mechanism. The FTC’s recent actions target identifiable patterns in how employers deploy and enforce noncompete programs, and impact both the enforceability of existing agreements and the development of future policies alike.  The risk is most concentrated in the following patterns:

• Blanket noncompetes where the entire workforce signs, regardless of role;
• Programs applied to low-risk employees who do not have access to confidential information, customer relationships, or strategic functions;
• Use of standardized, default restrictions (e., proscribed activity, geographic and temporal scope) that do not account for actual competitive risk; and
• Routine, aggressive use of litigation or demand letters against individual employees.

These are the areas where employers face the greatest exposure. And while these are not new issues, these practices now carry enhanced regulatory risk in addition to individual enforceability concerns. This shift has downstream implications for workforce strategy, litigation posture, and valuation assumptions where restrictive covenants are treated as protectable assets.

State Law Is Moving in the Same Direction

The FTC’s enforcement posture sits on top of an already active and increasingly restrictive state-law landscape. A growing number of states have moved beyond common-law reasonableness tests and have adopted statutory limitations that impose compensation thresholds or outright bans (e.g., four states now prohibit noncompetes entirely, with Washington State to join them in 2027). Even where statutes do not control enforceability of noncompetes, state courts continue to refine the boundaries of enforceability. This presents a layered and complex compliance problem for businesses that operate nationwide, but the direction is clear: restrictions must be justified, tailored, and defensible.

Takeaways

While noncompetes remain a business asset when used appropriately to protect legitimate competitive interests, their reliability as a default tool is diminishing.

Employers should reassess existing noncompete programs and future use with a focus on role-based tailoring and defensibility. That includes identifying where noncompetes are necessary, documenting the underlying business justification, and calibrating scope to the existing competitive risk.

In many cases, narrower tools such as confidentiality agreements, non-solicitation provisions, forfeiture-for-competition clauses, and/or paid notice periods will provide more durable protection with less scrutiny.

Employers that continue to rely on broad and uniform noncompete programs risk being forced to unwind those programs under regulatory pressure, rather than on their own terms.

 

[1] On August 20, 2024, a federal district court in Texas issued an order barring the FTC from enforcing its nationwide noncompete rule, which effectively would have eliminated noncompetes going forward. The ruling was on appeal when new leadership at the FTC announced it would no longer pursue appeals designed to permit enforcement of the rule.

 

For guidance on these and other employment issues, businesses should consult legal counsel. If SFBBG can be of assistance, please contact employment attorneys. 

 Contact

Adam C. Maxwell – [email protected] 

Adam N. Hirsch – [email protected] 

This article has been updated as of May 1, 2026.