The Non-Compete That Wouldn’t Die (And the Ones That Did)

The Non-Compete That Wouldn’t Die (And the Ones That Did)

If you’ve been following along, you’re probably well aware that the state of non-compete law in this country is currently all over the place. And if you haven’t been following along, we’d like to congratulate you on living a normal life.

The Federal Picture: More Active Than You’d Think

As you may remember, the Biden administration — via the Federal Trade Commission (FTC) — tried passing a nationwide ban on non-compete agreements in 2023. And when we say ban, we mean ban: the rule would have wiped out non-competes for nearly every worker in the country, retroactively and prospectively. As you can imagine, this was met with, shall we say, a spirited legal challenge. Yada yada yada, a federal court in Texas ultimately vacated the rule before it ever took effect.

When the Trump administration took over, the conventional wisdom was the FTC’s brief career as a labor-rights crusader was over, the non-compete ban would be quietly buried, and employers could go back to using facially overbroad and almost certainly unenforceable but technically lawful in a specious type of way non-compete clauses business as usual. And while the Trump administration’s FTC did drop its defense of the Biden-era rule and has made clear it has no interest in a nationwide ban, it has not exactly been hands-off.

In April 2026, the FTC entered into a massive consent order with Rollins, Inc. – the parent company behind Orkin and other pest-control brands. Rollins had a blanket policy requiring all 18,000-plus employees to sign non-competes upon hire, regardless of their position. And so, your friendly neighborhood pest-control technicians and customer service reps – including hourly workers who’d just been absorbed through corporate acquisitions – were handed non-compete agreements blocking them from working in the pest-control industry within a 75-mile radius for two years. For good measure, Rollins then sent hundreds of cease-and-desist letters and filed lawsuits to enforce those agreements and swat away those pesky rule-breakers.

The FTC’s position was: “Seriously? The pest-control technician has access to information so vital to your competitive position that you need to prevent him from killing wasps within a 75-mile radius?”

Needless to say, Rollins will no longer be engaging in this blanket practice. Under the consent order, Rollins must stop enforcing all existing non-competes against its workforce and notify current and former employees – all 18,000-plus of them – that they are free to compete and that Rollins needs to stop bugging out.

(Thank you. Thank you. We’re here all week.)

Then, less than a month later, the FTC sent a warning letter to Mortgage Connect, a Pennsylvania mortgage services company that had tried to enforce a nationwide non-compete against a former employee who’d left for a smaller competitor (a great example of “the law of unintended consequences”, the FTC got involved after reviewing the information Mortgage Connect had made public through its own lawsuit). The warning letter noted: “Seriously? The rank and file mortgage broker possessed such sensitive information and irreplaceable goodwill that you need to restrict where they work?” (Editor’s note: the warning letter did not actually say that . . . but it is directionally accurate).

The States: A Growing List

While the federal picture has been a bit chaotic, the states have been much more decisive . . . and, notably, moving in one direction.

(If you’re a business owner reading this and hoping that that direction is greater employer protection, you may want to sit down.)

The number of states with outright bans on employee non-competes has been growing steadily. Washington State signed a near-total ban in March 2026, effective June 2027, joining states like Minnesota, Montana, North Dakota, Oklahoma, Wyoming, and – oh what’s that other state that also has a total ban on non-competes, it’s on the tip of our tongues, I think some former reality TV star is running for office there or something, deep sigh – in essentially prohibiting them across the board.

And that’s before you get to the growing number of states that haven’t gone all the way to a ban but have enacted meaningful new restrictions. Tennessee just enacted its first-ever statutory framework governing non-competes (effective July 2026), including an outright prohibition on non-competes for employees earning less than $70,000 annually and presumptive duration limits for everyone else. Virginia expanded its restrictions effective July 2026 as well. Then there’s the particularly active front in healthcare: Colorado, Illinois, Indiana, Pennsylvania and several others have passed restrictions specifically targeting physicians and other healthcare providers, driven largely by staffing concerns and questions about patient access to care.

The consistent theme across all of this: states are increasingly skeptical that non-competes serve the interests they’re supposed to serve, and they’re acting on that skepticism.

A Quick Reminder: Enforceable Doesn’t Mean Anything Goes

One more point worth flagging before we land the plane – even where non-competes are entirely permissible, they still have to actually be enforceable. And courts are increasingly willing to void provisions they find overbroad rather than simply trim them down.

Despite being ever so close to passing a statewide ban of some sort, non-competes are still very much enforceable in New York . . . if they’re enforceable. Earlier this year, a Manhattan federal judge partially denied Palantir’s request for a preliminary injunction against former employees who had gone off to start a competing AI company because Palantir’s non-compete prohibited employees from working at any company “similar” to Palantir in a “similar” role. Given Palantir’s sprawling range of work and clients, the court couldn’t determine what AI company wouldn’t be similar to Palantir – which meant the restriction was too vague to enforce.

So where does this leave us? Two things seem pretty clear. First: blanket non-compete policies – particularly those applied to lower-wage, non-exempt workers without meaningful access to sensitive business information – are exactly what the current FTC is hunting for, and the act of enforcing them is what tends to draw the agency’s attention. Second: while a nationwide ban under this administration seems unlikely, the broader lesson from watching this issue over the past several years is that this stuff changes, and it changes fast. The Biden FTC tried to wipe non-competes out entirely. The Trump FTC is pursuing them selectively but actively. And regardless of the federal posture, the state-level march toward restriction isn’t slowing down – it feels far more like a question of when than if for most jurisdictions. If your non-compete strategy depends on the political winds staying exactly where they are, that’s not really a strategy.

If you haven’t looked at your agreements lately — or if you’re relying on boilerplate language that’s been sitting in your contracts since before anyone was paying close attention to any of this — now would be a very good time to take another look before someone else does it for you. We are, as always, happy to help with that.

That’s all for this one. Have a great weekend everyone. Enjoy the start of the World Cup! As always, if you’ve got questions, you know we’ve got answers (unless you’re a Spurs fan – it’s not personal)

~ The W + K Team