Something that I did not have on my bingo card for Trump 2.0 is the Federal Trade Commission (FTC) continuing to, among other things, target noncompetition agreements.
However, that’s exactly what’s happening.
The FTC recently announced the formation of a Joint Labor Task Force focused on investigating and prosecuting alleged deceptive, unfair, and anticompetitive labor market practices.
🔎 What’s in the FTC’s Crosshairs?
The FTC’s Labor Markets Task Force will focus on the following areas:
✅ No-poach and wage-fixing agreements: Agreements between companies to avoid hiring from each other or setting wage levels are seen as per se illegal.
✅ Noncompete agreements: While the FTC’s noncompete ban is dead, the agency intends to go after noncompete agreements that it believes “impose unnecessary, onerous, and often lengthy restrictions on former employees’ ability to take new jobs in the same industry after they leave their employment.”
✅ Termination penalties: The FTC is scrutinizing contractual provisions that impose financial penalties when workers leave for a competitor.
✅ Gig worker protections: The agency is concerned about misleading job postings and pay arrangements in the gig economy.
✅ DEI hiring practices: The FTC is looking at potential “collusion or unlawful coordination” on diversity, equity, and inclusion (DEI) metrics.
⚖️ What This Means for Employers
While some of these issues—like wage-fixing and no-poach agreements—have been legally risky for years, the FTC’s renewed focus on noncompetes and termination penalties means that even employers acting in good faith could face regulatory scrutiny.
The Memorandum is clear that the FTC is not going to step back from its evolving focus on protecting workers in the labor market. The Joint Task Force’s instructions from Commissioner Ferguson signal that the FTC will continue to scrutinize noncompete agreements it feels unfairly harm worker mobility. Unlike lateral agreements, such as no-poach or wage fixing agreements, which are seen as automatically illegal, it appears that the FTC views the use of noncompetes as requiring closer inspection regarding the nature of the restrictions and the type of worker signing them. This contrasts with the FTC’s prior attempt to simply ban all noncompete agreements.
This means that when it comes to noncompete agreements, employers should prepare for case-by-case scrutiny versus an overall ban.