By Greg Care
There are some more developments that are signaling the soon-to-be demise of the Federal Trade Commission’s (FTC) rule banning nearly all employment non-compete provisions nationwide. As I have predicted, the FTC is now all but saying that it will abandon the defense of the rule. However, the agency is not giving all non-competes a free pass. And, on the home front, a study commissioned by the Maryland General Assembly adds evidence to the case for regulating anti-competitive employment practices in the healthcare space.
On March 7, 2025, the FTC filed requests to pause the appeal proceedings in the Fifth Circuit (Ryan LLC v. Federal Trade Commission, No. 24-10951) and the Eleventh Circuit (Properties of the Villages, Inc. v. Federal Trade Commission, No. 24-13102), where the FTC had—before the change in administrations—been defending the legality of the rule. This followed the FTC’s prior requests for extensions of time to file reply briefs that I believe were also sought so that the FTC could revise its position and not go on the record again in defense of the rule.
With the FTC’s recently-fled motions, there is now less speculation involved. They cite remarks by the now-Chair of the FTC, Andrew Ferguson, at a February 8, 2025 event, noting his view that “the Commission should reconsider its defense of the challenged rule.” Chair Ferguson said at the Harvard Conservative and Republican Student Conference: “My view is that the Commission . . . basically needs to decide whether it’s a good idea—it’s in the public interest to continue defending this rule. I’ve articulated my view of this rule. I think it’s unconstitutional. I think it violated our organic Act [probably referring to the FTC Act]. I think it violated the APA [Administrative Procedures Act]. I think—I’m going to be presenting at some point to my colleagues the decision about whether to continue defending this rule and spending all the money necessary to defend the rule. Ya know, the Justice Department is having the same debates that we are now.”
I’ve never heard of a federal government official saying they would be giving in on litigation because of defense costs, especially since “[t]he Department of Justice is the world’s largest law office,” with “more than 10,000 attorneys nationwide” who work on salary, rather than bill hourly. Perhaps this fits with the imagined cost-savings motif of this administration and sounds good to the unwary, but it is window dressing. There’s little doubt about the outcome of these “debates.” In my view, the length of the stay requested in the appellate courts (120 days) was chosen based on how long Chair Ferguson expects it to take to replace former Chair Lina Khan with nominee Mark Meador. A Senate Committee held a hearing on Meador’s nomination on February 25, but there has yet to be a vote.
Once Meador is confirmed, the FTC will seek to dismiss the appeals. Both appellate courts decided in February that a group called the Small Business Majority and two individuals could not intervene to continue the defense of the FTC’s rule should the FTC back out. So, without the FTC defending the rule, it will effectively be defunct.
While I think the broad relief afforded by the FTC’s non-compete rule was a welcome solution to the patchwork of varying state laws on the topic, Chair Ferguson has expressed an intent to exercise the FTC’s enforcement powers to invalidate at least some non-competes. For example, in a February 26, 2025 memorandum, Chair Ferguson instructed his agency to assemble a “Joint Labor Task Force” to pursue matters involving “anticompetitive labor market conduct” (e.g., “No-poach, non-solicitation, or no-hire agreements, where employers agree to refrain from hiring each other’s employees” and “Noncompete agreements, which employers can use to impose unnecessary, onerous, and often lengthy restrictions on former employees’ ability to take new jobs in the same industry after they leave their employment”). He echoed this in his remarks at the February 8, 2025 Conservative and Republican Student Conference: “As Chairman, I absolutely intend to bring [Sherman Act] Section 1 cases in non-competes where the evidence shows that it actually diminishes competition.” He also referenced the ongoing lawmaking at the state level, which is an important battleground in this fight.
Meanwhile, in January 2025, we saw the findings from a study requested by the Maryland General Assembly regarding the effect of private equity (PE) ownership in the health care market. The report recognized the harms on non-competes in health care and proposed some solutions.
In the report, the authors noted that “[a]necdotally, PE acquisitions can also affect physician employment through the use of non-compete terms in employment agreements that limit the ability of physicians to work for, or establish, a competing practice within a certain geographic radius after leaving a practice. The Maryland General Assembly recognized this linkage when they directed MHCC to conduct a study on PE and market concentration in legislation that limited use of non-compete clauses in contract.” It went on to discuss HB 1388, the 2024 legislation that restricts non-competes for licensed health care workers and veterinarians that I’ve discussed before. “Although the breadth of HB 1388 obviates the need to implement new restrictions on non-compete clauses, other forms of restrictive covenants, including non-disparagement or nondisclosure agreements, could be similarly restricted for licensed health care workers. Note, HB 1388 applies to nonprofit employers of licensed health care workers, including nonprofit hospitals, which the currently-enjoined FTC rule restricting non-competes would not.”
While the study provides helpful insights, I would argue that HB 1388 was a good first step rather than a completed journey. We will have to see how the law affects behavior once it becomes effective regarding licensed health care providers before we declare that our work is done on non-competes.
If you have questions regarding non-competes in your situation, please contact us today to see if we can assist with your particular circumstances.
* Content on this website, including blog articles, are proprietary and copyright protected. If you wish to use all or part of a blog article, we request that you properly attribute the work and include a link to the Brown, Goldstein & Levy webpage on which it appears.
