On April 15, 2026, the Federal Trade Commission (“FTC” or “Agency”) enjoined prominent pest-control company, Rollins Inc., from entering into or enforcing non-compete agreements with its employees for the next 10 years. In reaching its decision, the FTC found that Rollins indiscriminately required the majority of its workforce to enter into non-competes, irrespective of the employee’s position, responsibilities, or pay. Pursuant to the Agency’s decision, Rollins is prohibited from “directly or indirectly, entering or attempting to enter into, maintaining or attempting to maintain, enforcing or attempting to enforce, or threatening to enforce a Non-Compete agreement against a Covered Employee.” This action reflects the FTC’s continued focus on post-employment restrictions, calls into question the viability of blanket non-compete agreements, and continues a trend from the Trump Administration to view non-compete restrictions with skepticism. Employers in every industry should reevaluate their restrictive covenant programs to determine whether the restrictions are justified.
Background of the FTC’s View on Non-Competes
During the last two presidential administrations, non-competes have been subject to particular scrutiny from the FTC. In April 2024, the Agency issued a Final Rule banning non-compete agreements nationwide, citing the propensity for the agreements to stifle competition and inhibit new business formation and innovation. The ban, which was slated to go into effect in early September 2024, would have prevented employers from enforcing existing non-competes and from entering into new non-compete agreements, except in very limited circumstances. At the time the FTC issued the Rule, the Agency’s now-head, Andrew Ferguson, dissented on the grounds that the Agency lacked statutory authority to issue the ban. Shortly before the ban’s effective date, the United States District Court for the Northern District of Texas echoed this sentiment in Ryan LLC v. Federal Trade Commission, Civ. Action No. 3:24-CV-00986 (N.D. Tex. Aug. 20, 2024), when it vacated the ban, finding it arbitrary and capricious and ruling that the FTC exceeded its authority in issuing the Rule. Although the FTC appealed this decision, it abandoned its appeal after the Trump Administration took office in January 2025, taking no further steps to reinstitute a nationwide ban and instead signaling that it would continue to monitor employers’ use of non-competes and their effect on certain industries.
The Agency has since shifted to a case-by-case approach, considering the anti-competitive effects of post-employment restrictions. Nevertheless, investigating and prosecuting employers utilizing overly broad non-compete agreements remains a priority for the FTC, which launched a Joint Labor Task Force to “root out deceptive, unfair and anti-competitive conduct.” Overly broad agreements that are not appropriately tailored to achieve businesses’ legitimate interests are now potential targets of enforcement actions. According to the FTC Chairman, “[t]he days of unreflective, unjustified, and anticompetitive noncompete agreements are over.”
The Rollins Decision
Earlier this year, the Agency filed a Complaint against Rollins, Inc., which is the parent company of several pest-control brands, including Orkin, HomeTeam, and Critter Control, challenging its use of allegedly overly-broad non-compete agreements, which Rollins indiscriminately required nearly all of its 18,000 employees to sign. According to the FTC, the non-compete agreements failed to consider the individual employees’ roles and responsibilities. The FTC alleged that, under the agreements, Rollins’ employees were prevented, for two years following the end of their employment, from working in the pest-control industry within a 75-mile radius of the Rollins location where they worked, often covering a multi-county region. The FTC further alleged that Rollins imposed the agreement on the vast majority of its employees, including pest-control technicians and customer service representatives, who had no access to the company’s proprietary information. These employees earned low wages and lacked the ability to negotiate. Some employees were also allegedly told to sign the agreement after their former employer had been acquired by Rollins and were not provided adequate time to consider the impact of their acquiescence.
The FTC also cited Rollins’ aggressive tactics in enforcing the agreements as cause for restricting Rollins’ use of non-competes now and in the future. The company issued hundreds of threatening cease-and-desist letters and filed multiple lawsuits against former employees, alleging breaches of the non-compete agreements. Upon receipt of these threats, many former employees limited or discontinued their own pest-control businesses because they lacked the resources to defend themselves against Rollins.
In sum, in the FTC’s view, the anti-competitive effects of Rollins’ non-compete agreements was clear. The FTC criticized the pro-forma nature of the agreements and found that they unfairly blocked competitive entry, denied workers access to job opportunities, restricted worker mobility, and likely caused lower wages, reduced benefits, less favorable working conditions, and personal hardship. Notably, the Agency concluded that Rollins had other less restrictive methods of protecting confidential information and maintaining customer relationships, including through the use of narrowly tailored non-solicitation agreements.
The FTC’s decision prohibits Rollins from entering into or enforcing its non-compete agreements and further requires the company to notify its current and former employees that they are no longer subject to the restrictions and can compete with the pest-control giant. The FTC also instituted significant compliance reporting requirements and granted itself substantial access to the company’s books and records, along with interview rights, on limited notice.
The FTC further issued warning letters to 13 other pest-control companies, cautioning against use of similar non-compete agreements.
Implications for Employers
While the FTC’s decision should provide a cautionary tale to businesses that utilize wide-scale non-compete programs across their employee populaces, it should also not come as a tremendous surprise that a program like Rollins’ was found to be invalid. In almost every state in which non-competes are permitted, the courts utilize some form of the “legitimate business interest” test. That test, effectively, asks the question whether the restriction is supported by 1) a legitimate business interest, generally the protection of confidential or trade secret information, 2) long-standing, near-permanent customer relationships, 3) a stable workforce, or 4) some combination thereof. Courts will not typically enforce agreements in which the restrictions are not narrowly tailored to protect these interests or when they purport to prohibit general competition. Moreover, a large number of states, over the past ten years, have instituted wage thresholds for use of non-competes with employees. In other words, on a granular scale, the FTC’s enforcement action is consistent with national trends as they relate to non-competes.
In issuing this decision and enjoining Rollins’ non-compete program, the FTC simply did—albeit on a far larger scale—what courts are tasked with doing in each instance in which an employer seeks to enforce its restrictive covenant: evaluate whether the restriction is narrowly tailored to support a company’s legitimate business interest. Here, the FTC determined that Rollins’ program was not.
What is different here is that Rollins is now enjoined from using any non-competes in its business, with very limited exception, for the next ten years. As part of the order, Rollins is also required to provide significant records access to the FTC on five-days’ notice and to provide ongoing, written compliance reports for the next ten years. Not only did the FTC invalidate Rollins’ non-compete program nationally, it also prohibited Rollins from attempting to resurrect its use of non-competes for the next ten years. Under normal circumstances, if a court ruled a non-compete invalid, a company would still have an option to modify its program to craft a restriction that was narrowly tailored. But here, Rollins has no such option. While it can continue to utilize confidentiality agreements and non-solicitation agreements, its ability to prohibit employees from going to a competitor or opening their own competing business in the same geography is foreclosed for the foreseeable future.
Key Takeaways
Employers utilizing non-compete agreements, especially large-scale programs across large swaths of employees, need to more carefully scrutinize their programs and determine whether they protect a legitimate business interest (use of confidential information in a competitor’s business, for example) or stifle competition. If a program does the latter, it is at risk of a potential FTC enforcement action.
At this time, employers should consider whether there are means other than non-compete agreements by which they can protect their interest—through confidentiality and non-solicitation agreements, as examples. Only where their legitimate business interests cannot be protected by these lesser means should employers utilize non-competition restrictions, and those should be narrowly tailored to protect only those interests that cannot be otherwise protected. Employers should avoid utilizing blanket non-compete restrictions across all or the large majority of their employees who are not otherwise exposed to confidential information, trade secrets, or customer relationships.
In no way is the FTC’s Rollins decision the death knell to non-compete agreements, but it follows a trend in which non-competes are carefully scrutinized. Employers must be mindful in their use and how their programs are designed.
If you have any questions about the implications of the Rollins decision, please reach out to the authors or your regular Saul Ewing attorney. As always, Saul Ewing is available to help you craft or analyze your company’s restrictive covenant program to determine if it is enforceable.
