FTC warns healthcare staffing groups not to deploy illegal noncompete contracts
The Federal Trade Commission (FTC) sent warning letters to large healthcare staffing companies and employers, urging them to review any noncompete agreements to ensure they comply with the law.
The agency said on Wednesday that healthcare employers may be unlawfully restricting nurses, physicians and other medical professionals through contractual agreements, limiting their options. However, in its announcement the FTC did not name who it contacted, nor did it specify what conditions in contracts may be running afoul of the law.
The FTC added that its concerns extend beyond the mobility of clinicians to find jobs where they wish in a competitive space. They also mentioned noncompete clauses “limit patients’ choices over who provides their medical care—including, critically, in rural areas where medical services are already stretched thin."
Full ban on noncompete clauses overturned
While the agency issued a sweeping ban on noncompete contracts in May 2024, it was later overturned by a U.S. district court in Texas, which ruled the agency exceeded its regulatory authority. As it stands, the court's ruling remains in effect.
However, under Section 5 of the FTC Act, the commission still retains the authority to investigate any action that stifles competition and the free flow of labor, which includes noncompete contracts—especially if they broadly restrict how and when individuals may seek work.
“Enforcement against unreasonable noncompete agreements remains a top priority for the Federal Trade Commission,” Kelse Moen, deputy director of the Bureau of Competition and co-chair of the agency’s Joint Labor Task Force, said in the announcement. “We strongly encourage all employers—not just those receiving letters today—to review their contracts closely, to ensure that any restrictions on employee mobility are in full compliance with the law.”
Notably, the FTC withdrew its appeal of the Texas court’s decision. That announcement came last week. However, FTC Chair Andrew N. Ferguson stressed that he would continue “enforcing the antitrust laws aggressively against noncompete agreements” including by “patrolling our markets for specific anticompetitive conduct that hurts American consumers and workers, and taking bad actors to court.”
The agency said it would continue to protect workers from noncompete clauses. To that end, it’s launched a public inquiry to better understand how the agency can act in enforcing existing antitrust laws as they pertain to such guarantees.
“The FTC also recently ordered the nation’s largest pet cremation business to stop enforcing noncompete agreements, freeing nearly 1,800 workers from these restrictive agreements,” it wrote in the announcement.
It remains to be seen what, if any, legal action will be taken against the recipients of its recent warnings.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.