On September 4, 2025, the Federal Trade Commission (FTC) weighed in on the current state of non-competition agreements (“non-competes”) in two actions. First, the FTC issued a Request for Information, inviting public comment on the effects of employer noncompetes. Second, the FTC initiated an action against a pet cremation company to protect workers from the company’s harmful noncompetes.
On September 5, 2025, the FTC took further action, dismissing its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC. In doing so, the FTC agreed to the vacatur of the Biden Administration’s 2024 Non-Compete Clause Rule which intended to ban most non-competes across the nation.
In her latest article, KingSpry’s Employment Law Chair, Avery E. Smith, Esq., discusses the FTC’s recent actions regarding non-competes and the broader impact they may have on the employment sector.
Request for Information
On September 4, 2025, the FTC posted a Request For Information (“RFI”), inviting public comment to assist it in understanding “the scope, prevalence, and effects of employer noncompete agreements.” The deadline for public comment is November 3, 2025.
The FTC appears focused on weighing the legitimate business uses of non-competes against the harmful impact they have on certain employees. The RFI notes that the FTC “remains committed to rooting out unfair and anticompetitive conduct in all appropriate cases where Congress has authorized the [FTC] to act.”
Complaint
On the same day, the FTC filed a Complaint against Gateway Services, Inc. and Gateway US Holdings, Inc. (“Gateway”). Gateway is a pet cremation company operating in the United States and Canada, employing 1,992 United States-based employees and servicing 17,000 customers across North America. The FTC charged Gateway for its unfair use of non-competes in violation of Section 5 of the Federal Trade Commission Act, which prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.”
Gateway’s Non-Competes
In 2019, Gateway adopted a policy requiring all newly hired employees to sign non-competes. Typically, these non-competes prohibited employees from working in the pet cremation services industry anywhere in the United States for one year following the conclusion of their employment with Gateway. Today, over 1,780 United States-based Gateway employees are subject to non-competes.
The Complaint discusses how Gateway applies its non-competes “without any individualized consideration of an employee’s role.” As such, Gateway’s non-competes cover both highly compensated executives and hourly workers.
The Complaint also addresses the anticompetitive nature of the non-competes, providing that they (1) “reduce competitive pressures,” (2) suppress competition, (3) alter employees’ “bargaining position,” and (4) impede “the entry and expansion of Gateway’s competitors in the pet cremation services industry,” among other impacts.
Proposed Decision and Order
Along with the Complaint, the FTC filed a proposed Consent Order. The public has thirty (30) days to submit comments on the proposed Order before the FTC takes further action.
The purpose of the proposed Order is “to remedy the harm to competition” caused by Gateway, and further, “to prevent [Gateway] from entering into, maintaining, or enforcing, or threating to enforce” the violative non-competes.
Non-competes covered by the proposed Order are those between Gateway and any person employed by Gateway within the last year or in the process of being employed by Gateway “that restricts or restrains the right or ability of the [person] to seek or accept employment with any Person, to operate a business, or otherwise to compete with [Gateway] for any period of time after the conclusion of the [person’s] employment with [Gateway].” The proposed Order will not, however, impact non-competes between Gateway and its directors, officers, or senior employees in connection with equity or equity-based interests.
Under the proposed Order, Gateway must:
- Cease and desist from entering, maintaining, or threatening to enforce non-competes.
- Cease and desist from communicating to an employee or their prospective or current employer that the employee is subject to a non-compete.
- Issue a letter to all employees subject to a non-compete indicating that they are a covered employee affected by the Order and that any non-compete between them and Gateway is invalid.
- Post a “clear and conspicuous” notice providing that employees are not and will not be subject to a non-compete; and
- Submit certain compliance reports to the FTC, among other requirements.
Key Takeaways
The FTC’s latest actions signal its intent to address non-competes in the near future, whether that be through additional enforcement actions or by proposing a new rule. While we await further action, employers are encouraged to review their non-competes and ensure that they are narrowly tailored to advance legitimate business interests.
