What happened

The FTC recently announced that Chairman Ferguson sent letters to multiple large healthcare employers and staffing companies. The template letter was released for public view. The letters encourage recipients to conduct a comprehensive review of employment agreements, including noncompetes and other post-employment restrictions, and eliminate provisions that are unfair or anticompetitive. The letters further suggest that employers should notify employees if they discontinue problematic restrictions.

What do the letters say?

The letters address healthcare employers’ restrictive covenants and include the following:

• Chairman Ferguson emphasizes that enforcement against unreasonable noncompete agreements remains a top FTC priority. The agency has the authority to investigate unfair methods of competition, including noncompetes that are unjustified, overbroad, or otherwise unfair and anticompetitive.
• Chairman Ferguson urges employers to carefully tailor restrictive covenants rather than impose broad bans on outside work.
• While narrowly drawn restrictions may be valid, the FTC cautions that employers often rely on sweeping noncompetes without exploring less restrictive alternatives.
• The letters specifically call out the healthcare sector, saying that noncompetes can limit clinician job opportunities and reduce patient choice, especially in rural areas.

Who is impacted?

The FTC did not disclose the companies that received letters but stated that they were sent to large healthcare employers and staffing firms. The agency also noted that enforcement will focus on roles such as nurses, physicians, and other medical professionals.

The FTC is focused on both healthcare employers and the firms who provide staffing to them. Even if a healthcare employer does not use overbroad restrictive covenants, it may face compliance risk if its staffing partners use them.

What can the FTC do if healthcare employers ignore its requests?

The FTC does not have the authority to seek damages against employers for using noncompetes it views as overbroad. Instead, the agency is authorized to issue cease-and-desist orders and seek other civil remedies in federal court. This enforcement action does not create a private cause of action, and employees cannot sue their employers directly under the FTC Act.

It is worth noting that the FTC does not have jurisdiction over nonprofit employers, which include many healthcare providers, and cannot seek enforcement against such organizations. That said, these nonprofit healthcare employers frequently compete with for-profit entities for talent, meaning they should still pay close attention to the FTC’s position and the practical impact of these warning letters on recruitment and retention efforts.

Why now?

This outreach comes just days after:

• The FTC withdrew from its defense of its prior regulation banning noncompetes nationwide, which was first approved by FTC commissioners in April 2024 and originally slated to become effective in September 2024 but was blocked by multiple courts.
• The agency brought an enforcement action against Gateway Services Inc., the nation’s largest pet cremation business, ordering the company to stop enforcing overbroad noncompetes binding nearly 1,800 workers.
• The FTC invited employees and employers to comment generally on noncompetes in a public Request for Information.

The letters also come on the heels of the FTC creating a Joint Labor Task Force in February 2025. That task force has been directed to prioritize prosecution of anticompetitive labor-market practices, including overbroad noncompetes and other restrictive covenants.

Together, these moves signal that the FTC is pivoting from blanket restrictions to case-by-case enforcement against overly restrictive noncompetes used by employers in the healthcare sector and beyond.

Next steps for employers

• Review your agreements. Revisit noncompetes, nonsolicits, and other restrictive covenants to ensure their scope, duration, and geographical limitations are appropriately tailored.
• Narrow where possible. Consider whether legitimate interests, such as protecting patient relationships or confidential information, could be addressed through less restrictive tools.
• Be proactive. Document the reasons for any restrictions you keep and consider whether to notify employees of any changes you implement.
• Get advice. The FTC has made it clear that healthcare employers and staffing firms will be under a microscope when it comes to case-by-case enforcement. Now is the time to make sure that your agreements hold up by conferring with legal counsel.

Bottom line

The FTC has put employers – especially healthcare employers – on notice that broad, overly restrictive noncompetes are at risk. Now is the time for healthcare companies and staffing firms to review and update their restrictive covenants.

Our experienced McDermott Will & Schulte lawyers are available to help you evaluate existing agreements and design enforceable, tailored restrictions that protect your business while minimizing regulatory risk.