FTC Finalizes Consent Order Requiring Employer to End Blanket Noncompete Agreements

Quick Hits

• The FTC negotiated a ten-year consent order with an employer to end the employer’s enforcement of blanket noncompete agreements against nearly 1,800 employees.
• The consent order mandates that the employer notify employees and former employees that the company’s noncompete agreements are no longer effective, cease enforcement of those agreements, and provide ongoing compliance reporting to the FTC for a decade.
• The consent order comes after the Trump administration stopped defending the rule adopted by the FTC during the Biden administration in the FTC’s effort to ban nearly all noncompete agreements in employment.
• The action marks a shift by the FTC under the Trump administration toward a case-by-case approach to analyze and attack unreasonable noncompete agreements the FTC views as harming competition in the labor market.

On November 25, 2025, the FTC issued a consent order involving pet cremation business Gateway Services, Inc., and its subsidiary, Gateway US Holdings, Inc. The consent order settles potential FTC charges that Gateway’s use of blanket noncompete agreements “constitutes an unfair method of competition with a tendency or likelihood to harm competition” in violation of Section 5 of the Federal Trade Commission Act.

According to the allegations set forth in the FTC’s complaint, Gateway used noncompete agreements that prohibited employees from “working in the pet cremation service industry anywhere in the United States” and that applied to nearly all Gateway employees outside of California (totaling more than 1,780 employees, including “highly compensated executives and hourly workers”) “without any individualized consideration of an employee’s role.”

The consent order, in which Gateway makes no admission of violations, requires it to cease enforcing such noncompete agreements, notify current and former employees that the agreements are no longer in effect, and maintain ongoing compliance for a period of ten years.

Covered Noncompete Agreements

The consent order broadly applies to “Covered Non-Compete Agreement[s],” referring to any noncompete agreement that “restricts or restrains the right or ability of [covered employees] to seek or accept employment with any Person, to operate a business, or otherwise to compete with [Gateway] for any period of time after the conclusion” of their employment. In an important distinction—reinforcing the further departure from one-size-fits-all prohibitions in the prior FTC rule—the order expressly excludes noncompete agreements with directors, officers, or senior employees who receive equity or equity-based interests in the company, as well as certain noncompete agreements reached as part of the sale of a business. The order also does not prohibit certain non-solicitation agreements, or covenants limited to the protection of confidential business information and trade secrets.

Cease Noncompete Enforcement, Other Compliance Obligations

Under the consent order, Gateway must:

• cease and desist from entering into or enforcing covered noncompete agreements with employees;
• cease and desist from communicating to prospective or current employers of covered employees that they are subject to a noncompete agreement; and
• not prohibit employees from “soliciting current or prospective customers” except those with which employees “had direct contact or personally provided service” in the prior twelve months.

Gateway agreed to provide, within forty-five days of the date of the order’s issuance, written notice to employees and former employees who were employed for one year or less. Within thirty days of the order and for its duration, Gateway must provide a detailed notice (electronic or otherwise) to each new covered employee, using specific language agreed to in the order, that the employee’s position is not and will not be subject to a noncompete agreement.

The order requires Gateway to “immediately cease enforcing all existing [covered noncompete agreements] in the United States.” Gateway was required to furnish copies of the order and complaint to its existing directors, officers, human resources officers, and hiring managers, and thereafter furnish copies to any new directors, officers, human resources officers, and hiring managers for a period of ten years from the date of the order’s issuance. The order also requires Gateway to submit compliance reports, including annual reports for the next nine years, providing the FTC with “sufficient information and documentation to enable the [FTC] to determine” compliance with the order. Finally, upon written request with five days’ notice, the FTC is generally permitted to access Gateway facilities, inspect its books and records, and interview directors, officers, and employees, for the purpose of determining or securing compliance with the order.

Noncompete Agreements Under Scrutiny

The Gateway enforcement action followed the FTC’s 3–1 vote on September 5, 2025, to dismiss its (stayed) appeals of federal court decisions in Florida and Texas that had struck down the Biden-era FTC rule banning nearly all noncompete agreements in employment. The FTC’s move to dismiss its appeals and accede to the vacatur of its rule put an end to the final rule adopted in April 2024 by a five-member FTC in a 3–2 vote, in which the two Republican members dissented.

The defeat of the ban was a welcome sign for employers that widely use noncompete agreements and other restrictive covenants to protect their legitimate business interests. While the FTC has shifted away from broad rulemaking to regulate noncompete agreements, it remains interested in scrutinizing them. The new approach seems to be to attack them on a case-by-case basis where the FTC believes there is overbreadth and leave in place narrowly tailored or less restrictive covenants. In February 2025, the FTC, under the leadership of recently elevated Chairman Andrew N. Ferguson, launched a “Joint Labor Task Force” to enforce federal antitrust laws and protect competition in labor markets, including by targeting unreasonable noncompete agreements and other restrictive covenants.

Next Steps

For now, the Gateway consent order highlights the types of blanket noncompete agreements the FTC is likely to pursue. Employers should take this as an opportunity to review their noncompete agreements to ensure they are narrowly tailored, including a reasonable time and scope, and that their organizations limit the use of noncompete agreements to those employees whose exposure to company confidential information and trade secrets warrants the use of noncompete clauses. Employers should, where possible, consider using differentiated agreements that are not as strict as noncompetes to protect their legitimate business interests, including through non-solicitation agreements and agreements solely to protect confidential business information and trade secrets.

Ogletree Deakins’ Unfair Competition and Trade Secrets Practice Group will continue to monitor developments and will provide updates on the Unfair Competition and Trade Secrets blog as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.

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