FTC Warns Employers on Risks of Enforcing Noncompete Agreements
FTC chairman issued a warning letter to Mortgage Connect over noncompete enforcement risks.
Why it matters: Counsel advising employers on employee contracts must consider increased FTC scrutiny and legal challenges to noncompete agreements. This guidance may affect talent retention strategies and contract enforceability in a complex regulatory environment.
- On May 8, 2026, FTC Chairman Andrew Ferguson sent a warning letter to Mortgage Connect about potential noncompete violations.
- FTC previously ordered Rollins, Inc. to stop enforcing noncompetes on over 18,000 employees nationwide in April 2026.
- In September 2025, the FTC took action against Gateway Services, restricting its enforcement of noncompetes on 1,800 employees.
- The FTC adopted a case-by-case enforcement approach following its 2025 decision to stop defending a broad noncompete ban rule.
The Federal Trade Commission is sharpening its focus on the enforceability of noncompete agreements, signaling potential legal risks for employers relying on these contracts to restrict workers.
On May 8, 2026, FTC Chairman Andrew N. Ferguson sent a warning letter to Mortgage Connect, urging the company to carefully review its noncompete agreements amid a pending lawsuit where Mortgage Connect sought to enforce such an agreement against a former employee and her new employer. This letter underscores the FTC's expanding scrutiny of noncompete clauses potentially violating antitrust laws.
The FTC's intensified enforcement follows notable recent actions. In April 2026, it ordered Rollins, Inc., a major pest-control company, to cease enforcing noncompete agreements against more than 18,000 employees nationwide (FTC Rollins Inc. case). Earlier, in September 2025, the agency took action against Gateway Services, requiring the company to end noncompete enforcement affecting nearly 1,800 workers in the pet cremation industry (FTC Gateway Services action).
Chairman Ferguson has publicly emphasized that many noncompetes may violate antitrust laws and that firms in industries with extensive noncompete coverage will receive warnings as the FTC prepares further investigations and enforcement actions. In a January 2026 workshop, the FTC reiterated its commitment to targeting noncompetes that fail to promote pro-competitive interests and are overly broad (Saiber workshop analysis).
This shift followed the FTC's September 2025 decision to stop defending its prior rule banning most noncompete agreements nationwide, opting instead for an "aggressive, case-by-case enforcement" approach (Crowell analysis).
The FTC's recent warning and enforcement actions send a clear message to employers and their legal advisers: noncompete agreements carry significant regulatory risk and must be narrowly tailored to avoid violating antitrust laws.
By the numbers:
- May 8, 2026 — Date FTC Chairman Ferguson issued the warning letter to Mortgage Connect
- 18,000+ — Number of Rollins, Inc. employees affected by FTC's enforcement order
- 1,800 — Number of Gateway Services, Inc. employees restricted by FTC noncompete action
Yes, but: The FTC’s case-by-case enforcement approach creates uncertainty regarding which noncompete agreements will face regulatory or legal challenges.
What's next: Expect increased FTC investigations and warning letters targeting employers employing broad or anticompetitive noncompete agreements.