Fox, O’Neill, & Shannon has been monitoring and advising our clients regarding the Federal Trade Commission’s (FTC) April 2024 rule banning most employment -related noncompete agreements (the Rule). See, for example, https://foslaw.com/appeals-of-ftc-noncompete-rule-put-on-hold/.
The validity of the Rule, which was issued under the Biden administration, is currently being reviewed in two federal courts of appeal. The Rule has also been re-evaluated by the Trump administration which, among other things, has appointed a new FTC chairman.
On September 5, 2025, the FTC voted 3-1 to begin the process to vacate the Rule and dismiss the appeals. The agency stated that it believed the Rule wrongly preempted or otherwise displaced state laws governing employment noncompete agreements.
In a sign that the FTC may operate on a case-by-case basis instead of through a rule, the agency, one day before its vote on the Rule, issued a public inquiry regarding employment noncompete agreements.
The FTC has indicated that the purpose of the inquiry is “to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.”
The public may submit comments and information at Regulations.gov through November 3, 2025.
The FTC’s press release on the public inquiry quoted a related agency representative as stating that the administration intends to “uproot the worst offenders,” presumably including through information obtained in the inquiry. Federal Trade Commission Issues Request for Information on Employee Noncompete Agreements | Federal Trade Commission
Consistent with and on the same day as the FTC announced its public inquiry, the FTC announced it had ordered the country’s largest pet cremation business, Gateway Services, Inc., and its subsidiary, to stop enforcing noncompete agreements which the company had the bulk of its almost 1800 employees sign.
This action suggests that the FTC may be targeting large employers which have virtually all employees sign noncompete agreements, instead of using such agreements only for employees who have developed personal relationships with customers and/or are privy to private customer, product, or financial information of the employer.
Where does this leave employers?
Wisconsin employers continue to be governed by Wis. Stat. § 103.465, which generally requires noncompete agreements to be reasonable in time, duration, and territory.
To best protect themselves in the event of a lawsuit or administrative enforcement action, employers should tailor their use of noncompete agreements to employees whose employment with a competing company would jeopardize a strong interest of the employer which it has a right to protect. Employers should also ensure that noncompete agreements are not overly long in duration (1-2 years is customary in Wisconsin) and cover only those territories in which the employee performs services and the customers with whom the employee has contacts.
If you have questions regarding the Rule, the FTC’s actions, or your company’s noncompete agreements, contact your FOS attorney.
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