The Federal Trade Commission launched a public inquiry Tuesday to examine the scope, prevalence, and effects of employer noncompete agreements, marking a significant step toward potential future enforcement actions against what officials call unfair and anticompetitive practices.
The inquiry seeks to gather comprehensive information about noncompete agreements, which are contractual terms between employers and workers that typically prevent employees from working for competing employers or starting competing businesses after their employment ends. The FTC's investigation comes amid growing concerns that these agreements are being used to suppress worker mobility and wages.
"We are asking the public to help shine a light on unfair and anticompetitive agreements," said Kelse Moen, Deputy Director of the Bureau of Competition and co-chair of the agency's Joint Labor Task Force. "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."
The FTC acknowledges that noncompete agreements can serve valid purposes in some circumstances, such as protecting legitimate business interests like trade secrets or specialized training investments. However, the agency points to available evidence indicating these agreements are often subject to abuse, potentially harming workers' ability to change jobs and limiting competition in labor markets.
The public comment period will remain open for 60 days, with submissions due no later than November 3, 2025. The FTC is particularly encouraging input from current and former employees who have been restricted by noncompete agreements, as well as employers who have faced hiring difficulties due to rivals' use of such agreements.
Comments will be submitted through Regulations.gov and subsequently posted publicly, though the FTC has established alternative submission guidelines for individuals wishing to provide confidential, non-public information. This approach reflects the agency's recognition that some workers may face retaliation concerns when discussing their experiences with restrictive employment agreements.
The inquiry represents a continuation of increased federal scrutiny of noncompete agreements under the current administration. These agreements have become increasingly common across various industries and job levels, extending beyond traditional high-level executive positions to include workers in fields such as fast food, healthcare, and technology.
Economic research has suggested that widespread use of noncompete agreements may suppress wages by reducing worker bargaining power and limiting job mobility. Studies indicate that when workers cannot easily move between competitors, employers face less pressure to offer competitive compensation packages or improve working conditions.
The FTC's request for information specifically seeks details about how noncompete agreements are being implemented across different industries, their duration and geographic scope, and their practical effects on workers and competition. The agency is also interested in understanding enforcement patterns and whether certain types of businesses or worker categories are disproportionately affected.
For employers, the inquiry may signal increased regulatory attention to their use of noncompete clauses. Companies that rely heavily on these agreements may need to evaluate whether their practices could face future FTC enforcement actions. The agency has indicated it will "closely review every response" to inform potential policy changes or enforcement priorities.
The investigation also reflects broader labor market dynamics, as the U.S. economy continues to experience tight employment conditions in many sectors. Worker mobility has become an increasingly important factor in wage growth and job satisfaction, making restrictions on that mobility a policy concern for regulators.
The timing of the inquiry coincides with various state-level efforts to restrict or ban noncompete agreements. Several states have recently enacted legislation limiting the use of these agreements, particularly for lower-wage workers or in specific industries. The FTC's federal-level investigation could inform potential nationwide standards or enforcement approaches.
Legal experts note that the FTC's authority to address noncompete agreements stems from its mandate to prevent unfair methods of competition and protect consumers. While noncompete agreements primarily affect workers, the agency can argue that restrictions on labor mobility ultimately harm consumer welfare by reducing competition and innovation.
The Joint Labor Task Force, which Moen co-chairs, was established to coordinate the FTC's efforts on labor market issues. This inquiry represents one of the task force's most visible initiatives since its formation, demonstrating the agency's commitment to examining how business practices affect worker welfare and market competition.
Businesses currently using noncompete agreements should prepare for potential increased scrutiny and consider whether their practices align with legitimate business needs. Workers affected by such agreements now have a formal avenue to share their experiences with federal regulators, potentially influencing future policy decisions that could reshape employment practices across the American economy.