Noncompetes under scrutiny
What happened
- The FTC is sharpening scrutiny of noncompete agreements, focusing on narrow tailoring and worker mobility protections. - Rollins was ordered to stop enforcing noncompetes affecting more than 18,000 employees, showing enforcement risk. - States are also limiting covenants, meaning employers relying on broad noncompetes face legal and reputational exposure. (simplywall.st)
Why it matters
The Federal Trade Commission ordered Rollins on April 15 to stop enforcing noncompete agreements against more than 18,000 workers nationwide. (ftc.gov) The agency said Rollins, the parent of Orkin, used employment contracts that typically barred workers for two years from taking pest-control jobs within about 75 miles of their former branch, and sometimes across multiple counties. (ftc.gov) The case did not revive the Federal Trade Commission’s blocked nationwide noncompete rule. The commission says that rule is still not in effect after a federal court stopped enforcement in August 2024 and the agency moved in September 2025 to dismiss its appeal. (ftc.gov) Instead, the agency used a company-specific antitrust case and paired it with warning letters to other employers in the pest-control industry. FTC Chairman Andrew Ferguson said the commission is targeting “unlawful” noncompetes rather than every noncompete agreement. (ftc.gov; ftc.gov) That leaves employers with a narrower question than the 2024 rule posed: not whether noncompetes survive in theory, but whether a specific covenant is limited enough in time, geography and job scope to hold up under scrutiny. The Rollins complaint says the company imposed the clauses on large numbers of rank-and-file workers and former workers, not just senior executives. (ftc.gov) State law is also moving against broad restraints. Minnesota law says employment noncompetes are void and unenforceable, while California’s long-standing statute says contracts restraining someone from a lawful trade are void except for limited statutory exceptions. (revisor.mn.gov; codes.findlaw.com) Other states still allow some noncompetes, but only above pay thresholds or with other limits. Illinois bars them for employees earning $75,000 or less a year, rising to $80,000 on January 1, 2027, and Washington says they are void for employees below its earnings threshold and adds special rules for layoffs. (ilga.gov; app.leg.wa.gov) Rollins’ case shows the risk of using one template across dozens of states and thousands of workers. A clause that looks routine in one office can collide with a state ban, a salary threshold, or a federal allegation that the restriction suppresses worker mobility. (ftc.gov; revisor.mn.gov; app.leg.wa.gov) The immediate lesson is less about eliminating every post-employment restriction than about drafting the narrowest one an employer can justify. The Federal Trade Commission’s order against Rollins turns that legal debate into an enforcement one. (ftc.gov; ftc.gov)
Key numbers
- Rollins was ordered to stop enforcing noncompetes affecting more than 18,000 employees, showing enforcement risk.
- (simplywall.st) The Federal Trade Commission ordered Rollins on April 15 to stop enforcing noncompete agreements against more than 18,000 workers nationwide.
- (ftc.gov) The agency said Rollins, the parent of Orkin, used employment contracts that typically barred workers for two years from taking pest-control jobs within about 75 miles of their former branch, and sometimes across multiple counties.
- The commission says that rule is still not in effect after a federal court stopped enforcement in August 2024 and the agency moved in September 2025 to dismiss its appeal.
Quick answers
What happened in Noncompetes under scrutiny?
The FTC is sharpening scrutiny of noncompete agreements, focusing on narrow tailoring and worker mobility protections. Rollins was ordered to stop enforcing noncompetes affecting more than 18,000 employees, showing enforcement risk. States are also limiting covenants, meaning employers relying on broad noncompetes face legal and reputational exposure. (simplywall.st)
Why does Noncompetes under scrutiny matter?
The Federal Trade Commission ordered Rollins on April 15 to stop enforcing noncompete agreements against more than 18,000 workers nationwide. (ftc.gov) The agency said Rollins, the parent of Orkin, used employment contracts that typically barred workers for two years from taking pest-control jobs within about 75 miles of their former branch, and sometimes across multiple counties. (ftc.gov) The case did not revive the Federal Trade Commission’s blocked nationwide noncompete rule. The commission says that rule is still not in effect after a federal court stopped enforcement in August 2024 and the agency moved in September 2025 to dismiss its appeal. (ftc.gov) Instead, the agency used a company-specific antitrust case and paired it with warning letters to other employers in the pest-control industry. FTC Chairman Andrew Ferguson said the commission is targeting “unlawful” noncompetes rather than every noncompete agreement. (ftc.gov; ftc.gov) That leaves employers with a narrower question than the 2024 rule posed: not whether noncompetes survive in theory, but whether a specific covenant is limited enough in time, geography and job scope to hold up under scrutiny. The Rollins complaint says the company imposed the clauses on large numbers of rank-and-file workers and former workers, not just senior executives. (ftc.gov) State law is also moving against broad restraints. Minnesota law says employment noncompetes are void and unenforceable, while California’s long-standing statute says contracts restraining someone from a lawful trade are void except for limited statutory exceptions. (revisor.mn.gov; codes.findlaw.com) Other states still allow some noncompetes, but only above pay thresholds or with other limits. Illinois bars them for employees earning $75,000 or less a year, rising to $80,000 on January 1, 2027, and Washington says they are void for employees below its earnings threshold and adds special rules for layoffs. (ilga.gov; app.leg.wa.gov) Rollins’ case shows the risk of using one template across dozens of states and thousands of workers. A clause that looks routine in one office can collide with a state ban, a salary threshold, or a federal allegation that the restriction suppresses worker mobility. (ftc.gov; revisor.mn.gov; app.leg.wa.gov) The immediate lesson is less about eliminating every post-employment restriction than about drafting the narrowest one an employer can justify. The Federal Trade Commission’s order against Rollins turns that legal debate into an enforcement one. (ftc.gov; ftc.gov)
