FTC’s New Crackdown on Non-Competes: What Workers Must Know | 2025 Update

Introduction

Imagine being offered a new job with better pay and hours, only to be told you can’t take it because of a contract you signed years ago. For many American workers, this has been a painful reality. Non-compete agreements have locked people into low-paying jobs, limited career growth, and forced families to make tough financial choices.

The good news? The Federal Trade Commission (FTC) is finally taking a stand. In 2025, the agency shifted its approach to aggressively pursue companies that misuse non-competes. The first major case against Gateway Pet Memorial Services shows that change is here.

At Sanders Law Group, we believe in protecting employees. We do not represent employers in these matters.  Our mission is to fight for workers who feel stuck, silenced, or held back by unfair restrictions. This blog will explain what non-competes are, why the FTC is cracking down, and what you as an employee need to know to protect your rights.

What Are Non-Compete Agreements?

A non-compete agreement is a clause in an employment contract that stops you from working for a competitor or starting your own business in the same field for a certain period of time after leaving a job and/or within a certain geographical area.

Why Employers Claim They’re Necessary

• To protect confidential information or trade secrets.
  
• To keep customers from following you if you switch jobs.
  
• To make sure they benefit from the money they spend training employees.
  

Why Workers Are Harmed

• The true purpose behind these agreements – particularly where low-skilled jobs are concerned – is to protect the employer by stifling competition and discouraging employees from accepting better opportunities elsewhere.  Consider, for example, a fast-food worker.  He or she might want to go work for another restaurant offering better pay, however if there is a non-compete in place preventing them from working for another restaurant for X months and/or within Y miles of the current restaurant that may not be possible. 
  
• Many employees sign them reading them or without fully understanding the impact.
  
• Non-competes can block opportunities in an entire industry, leaving workers unable to use their skills elsewhere.

While non-competes may sound reasonable in theory, in practice they are often abused by employers. We’ve seen them used against fast-food workers, nurses, and even delivery drivers; jobs where there is no legitimate reason to restrict someone’s future career.  Many states, in fact, refuse to enforce them unless certain conditions are met.  In New York, for example, a non-compete must (a) be designed to protect a legitimate business interest such as confidential or proprietary information, or client relationships, (b) be limited in duration and geographic scope, and not pose an unnecessary hardship, and (c) cannot be unfairly restrict the employee’s ability to earn a living.  A court might, for example, uphold a car dealership’s non-compete agreement restricting the use of customer information by its salespeople in the event they leave to work for a competitor, however it would likely not uphold the same agreement for an employee who simply washes cars.      

The FTC’s Changing Approach

The FTC has long been aware that non-competes hurt workers, but for years, there was little accountability.

The Nationwide Ban That Stalled

• In 2023, the FTC attempted to ban most non-compete agreements nationwide.
  
• The proposal was meant to boost wages, increase job mobility, and help families.
  
• Powerful business groups fought back, and federal courts blocked the rule.
  

The New Strategy: Protecting Workers Through Enforcement

Instead of giving up, the FTC pivoted. In 2025, it withdrew its appeals and announced a new plan: case-by-case enforcement.

This means the FTC will now directly target companies that use unfair, overly broad, or harmful non-competes. By focusing on individual cases, the FTC can still protect workers while avoiding some of the legal challenges that blocked a full nationwide ban.

For employees, this is a win. It means regulators are paying attention, and employers can no longer hide behind one-size-fits-all contracts.

The Gateway Pet Memorial Case: A Turning Point

The first major enforcement case under this new strategy involved Gateway Pet Memorial Services, a pet cremation company.

What Gateway Did

• Required almost every employee to sign a non-compete, from executives to hourly workers.
  
• Imposed a nationwide restriction, blocking employees from working anywhere in the pet cremation industry for a full year after leaving.
  

Why It Matters for Workers

• Hourly workers like drivers and facility staff had no access to sensitive company information, yet were forced into restrictive contracts.
  
• Employees were left with few options if they wanted to leave, essentially trapped in their jobs.
  
• The FTC’s action sends a message that workers’ rights are finally being prioritized.
  

For employees everywhere, the Gateway case is proof that regulators are watching and employers will be held accountable for abusive practices.

What the FTC Found Problematic

The FTC pointed out several unfair aspects of Gateway’s contracts, many of which we regularly see in cases brought to our firm:

1. Blanket Coverage – All workers, regardless of role, were restricted.
   
2. Nationwide Scope – Workers were banned from jobs in areas where the company didn’t even operate.
   
3. Industry-Wide Bans – Employees couldn’t work in the entire pet cremation industry, not just with direct competitors.
   
4. One-Year Limit – A full year of restrictions, even for low-wage employees.
   
5. No Case-by-Case Review – Everyone got the same agreement, whether they were executives or entry-level workers.
   

These practices are not only unfair, they are illegal under the FTC Act when they harm workers and competition.

The Proposed Settlement Order Explained

Here’s what the FTC required Gateway to do:

• End enforcement immediately: Workers were freed from their non-competes.
  
• 10-year ban: Gateway cannot use non-competes for most employees for the next decade.
  
• Exceptions are narrow: Only high-level executives, equity holders, or people involved in selling a business may face restrictions.
  
• Non-solicitation limits: Even these are tightly controlled, applying only to recent customers the worker dealt with directly.
  
• Notice to employees: Gateway had to tell workers, both current and former, that their contracts were invalid.
  
• Transparency in hiring: New employees must be told upfront that they will not be subject to non-competes.
  

For workers, this settlement is a victory. It shows that regulators are stepping in to protect employees and ensure companies cannot abuse their power.

Key Factors FTC Will Consider Going Forward

The FTC has outlined the criteria it will use in future cases. For workers, this provides a roadmap for identifying when your non-compete may be unlawful:

• Wages and skill level: If you are a low-wage or hourly worker, your non-compete is far less likely to be valid.
  
• Independent contractor status: If you are labeled a contractor but depend on one company’s resources, restrictions may not hold up.
  
• Employer investment: Did your employer really give you specialized training or sensitive information? If not, restrictions are questionable.
  
• Alternatives available: Employers should use NDAs or non-solicitation agreements instead of blocking your career.
  
• Scope and duration: Restrictions that cover the entire country or last a year or more are more likely to be invalid.
  
• Market power: If non-competes are used widely in your industry, they may be harming competition, and you may have grounds to challenge yours.
  

Understanding these factors can help employees determine whether their contracts are fair, or abusive.

What This Means for Employees

This shift by the FTC is good news for workers. But you may still have questions:

1. Do I Still Have to Follow My Non-Compete?

Not necessarily. Many agreements are unenforceable because they are too broad, too long, or applied to the wrong type of employee.

2. What If My Employer Threatens Me With Legal Action?

Don’t panic. Employers often rely on intimidation. In many cases, these agreements cannot stand up in court.

3. How Do I Protect Myself?

• Review your contract with an employment lawyer.
  
• Understand your rights under applicable laws.
  
• Don’t assume that just because you signed something, it’s valid.  A non-compete may be perfectly reasonable for a highly-compensated executive, but that’s oftentimes not the case where an entry level worker is concerned.
  

4. Why This Matters for My Future

Non-competes suppress wages and limit mobility. If you’re free to pursue better jobs, you can negotiate higher pay and build a stronger career.

The Bigger Picture: What’s Next for Non-Competes in 2025?

The Gateway case is only the beginning. More actions are expected as the FTC investigates abusive practices across industries.

For Workers, This Means:

• More opportunities to challenge unfair contracts.
  
• Less fear when leaving a job for better pay.
  
• A future where career growth isn’t restricted by one-sided employer demands.
  

We believe this is a historic turning point for employee rights. While the fight isn’t over, the balance of power is shifting back toward workers.

Conclusion – How Sanders Law Group Can Help

At Sanders Law Group, we stand firmly with employees. We do not represent employers in these cases. Our mission is simple: to protect workers from unfair restrictions and ensure everyone has the freedom to pursue better opportunities.

If you feel trapped by a non-compete agreement, we can help you:

• Review your contract and explain whether it’s enforceable.
  
• Challenge overly broad agreements in negotiations or court.
  
• Protect your rights if your employer tries to intimidate you with legal threats.
  
• Fight for your ability to move forward with your career.
  

You should never have to sacrifice your future because of an unfair contract. With the FTC cracking down on abusive practices, now is the time to stand up for your rights.

Contact Sanders Law Group today to learn how we can help you break free from restrictive non-competes and move toward a brighter future.