The Federal Trade Commission (FTC) is working to shift toward case-by-case enforcement of noncompete agreements after a nationwide ban was struck down in court.

The FTC issued a request for information on Thursday, seeking comments to better understand “the scope, prevalence and effects” of employer noncompete agreements.

Members of the public, including current and former employees bound by these agreements and employers experiencing hiring challenges due to a competitor’s noncompete agreements, are encouraged to provide comments.

Generally, a noncompete agreement prevents an employee from working for a competitor or starting a competing business after leaving their job. While these agreements can be useful, some employers may enforce them without assessing their appropriateness, according to the FTC.

Home-based care providers sometimes use noncompete agreements to discourage former executives from launching their own businesses or from sharing company secrets.

In 2021, the Biden administration issued an executive order urging the FTC to “ban or limit” non-compete agreements entirely.

Last year, the agency issued a final rule that would ban, as an unfair method of competition, contractual terms preventing workers from seeking certain employment after their contract with an employer ends. The American Hospital Association and the Federation of American Hospitals in February urged the U.S. Court of Appeals to vacate the rule nationwide. In August 2024, a federal judge barred the FTC’s ban from moving forward.

On Friday, the FTC also voted 3 to 1 to dismiss its appeals in Ryan LLC versus FTC and Properties of the Villages versus FTC and to accept the court’s decision to vacate the rule, which aimed to “ban almost all contracts in which an employee agreed not to work for his or her employer’s competitor after his or her employment.”

“Unreasonable noncompete agreements have proliferated for too long in the dark. With the assistance of the employees and workers most burdened by them, the Trump-Vance FTC intends to uproot the worst offenders and restore fairness to the American labor market,” Kelse Moen, deputy director of the Bureau of Competition and co-chair of the agency’s Joint Labor Task Force, said in a statement.

As of Monday, a few comments had been published on regulations.gov, expressing varied opinions.

One commenter said that “non-compete agreements are unethical in the health care world, especially in rural settings.”

Another argued that it is “100% reasonable and valid to restrict an employee from leveraging or exploiting the network they were paid a salary to develop if they leave the employer that paid that salary.”

The FTC said its staff has reviewed substantial evidence suggesting noncompete agreements may unfairly restrict workers from switching to better jobs, hinder new business creation, prevent labor from moving from overserved to underserved markets and weaken competitors’ ability to compete. This could lead to lower worker earnings, reduced innovation, higher consumer prices, and overall negative impacts on the quality of life for both workers and consumers.

“These concerns may be especially significant in health care markets, where noncompete agreements may limit employment options for nurses, physicians, and other medical professionals and thereby restrict patients’ choices of who provides their medical care,” the FTC said. “These harms may be particularly acute in rural areas where medical services are already stretched thin.”

The FTC will collect comments until Nov. 2.

Editor’s note: This article’s headline originally read “FTC Considers Banning Noncompete Agreements”. It was updated to “FTC Shifts Toward Case-by-Case Enforcement Of Noncompete Agreements”.