Now is the time for healthcare companies to review existing practices and agreements and work with counsel to mitigate risk in this fast-evolving landscape.
Despite ending its efforts to ban noncompete agreements by rule nationwide, the Federal Trade Commission (FTC) has made clear that noncompetes and other restrictive covenants remain a priority. In keeping with this priority, on September 10, 2025, the FTC issued warning letters to several large healthcare employers and staffing companies.
In the warning letters, the FTC suggests that the recipient healthcare employers and staffing companies undertake a review of their noncompete and other restrictive covenant agreements and policies and discontinue any policies that are unfair or anticompetitive under the FTC Act:
Available information suggests that many healthcare employers and staffing companies include noncompete agreements (“noncompetes”) in employment contracts that may unreasonably limit employment options for vital roles like nurses, physicians, and other medical professionals. Noncompetes may have particularly harmful effects in healthcare markets where they can restrict patients’ choices of who provides their medical care—including, critically, in rural areas where medical services are already stretched thin… .
While narrowly tailored noncompetes can serve valid purposes in certain circumstances, available evidence indicates that in practice many employers impose noncompetes without due consideration to whether they are necessary and appropriate under the circumstances, including whether less restrictive alternative contract terms may sufficiently achieve the same procompetitive purposes. For example, noncompetes may be overbroad in duration or geographic scope. Or they may be inappropriate for certain roles entirely… .
The FTC is focusing resources on enforcing Section 5 of the FTC Act against unlawful noncompetes, particularly in the healthcare sector. Accordingly, I encourage you to conduct a comprehensive review of your employment agreements—including any noncompetes or other restrictive covenants—to ensure that they comply with applicable laws and are appropriately tailored to the circumstances. If your company is currently using noncompetes that are unfair or anticompetitive under the FTC Act, I strongly encourage you to discontinue them immediately and to notify relevant employees of the discontinuance.
What This Means for Employers
The FTC’s warning letters supplement existing state statutes and other laws pertaining to noncompetes and other restrictive covenants with healthcare practitioners.
Now is the time for healthcare companies to review existing practices and agreements and work with counsel to mitigate risk in this fast-evolving landscape. Accordingly, healthcare employers should consult with legal counsel to take proactive steps to mitigate risk.
Audit Existing Agreements and Policies
Review current noncompete, nonsolicitation and other restrictive covenant agreements and policies with counsel to ensure that they comply with existing applicable state laws and to assess scope, necessity, enforceability and the roles to which they apply.
Evaluate Alternatives
Consider with counsel whether narrower tools, such as nondisclosure or nonsolicitation covenants, may adequately protect legitimate business interests.
Monitor Developments
The FTC’s inquiry could lead to significant changes in the legal landscape governing restrictive covenants. State laws concerning restrictive covenants, including those pertaining to healthcare practitioners, continue to evolve. Healthcare employers that rely heavily on noncompetes should stay informed and be prepared to adjust compliance strategies.
For More Information
If you have any questions about this Alert, please contact Erin M. Duffy, any of the attorneys in our Health Law Practice Group, Shannon Hampton Sutherland, Lawrence H. Pockers, any of the attorneys in our Trade Secrets and Non-Compete Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.