Non-Competes in 2025: When Retention Shouldn’t Feel Like a Restraining Order
Last year, we wrote about the challenges non-compete agreements pose for both employers and employees, comparing leaving a job to ending a relationship. Non-compete agreements were the messy “it’s not you, it’s me” clause that made moving on harder than it should be.
Fast-forward to today: the legal landscape has shifted again. The Federal Trade Commission (FTC) has stepped back from its broad attempt to outlaw most non-compete agreements nationwide. But while the big breakup never happened, the FTC isn’t walking away. Instead, it’s keeping a close eye on agreements that feel more like control than protection and letting employers know that clinging too tightly can backfire.
What’s New in 2025
Broad ban abandoned. The FTC dropped its appeal of the 2024 non-compete ban, shelving its attempt to eliminate them nationwide.
Case-by-case scrutiny. Instead of a blanket rule, the FTC is targeting agreements that appear overly restrictive or unfair, especially in the healthcare and staffing sectors.
Real enforcement in action. Gateway Services, a pet cremation company, was ordered to cease enforcing non-compete agreements for nearly 1,800 employees, many of whom are frontline workers.
Data gathering underway. The FTC issued a Request for Information (RFI) to assess the impact of non-competes on wages, mobility, and competition in critical industries.
Why This Matters Beyond the Legal Headlines
In the workplace, as in relationships, people stay for better reasons than fear of consequences.
Retention by contract is fragile. If employees remain only because of a non-compete, engagement and loyalty are already slipping.
Recruiting gets complicated. Job seekers are increasingly wary of restrictive agreements. A reputation for relying too heavily on them can make your company appear controlling rather than attractive.
Your brand is at stake. Just as word spreads after a bad breakup, overreaching non-competes can damage your reputation not just with candidates, but with current employees, clients, and partners.
What This Means for Employers (and Recruiters)
Audit your agreements. Review who is covered and whether the restrictions are truly necessary and reasonable.
Explore alternatives. Non-disclosure and non-solicitation agreements can often protect your business without limiting mobility.
Watch the states. While the national ban is off the table, state-level laws continue to evolve. For example, California has long prohibited most non-compete agreements under Business & Professions Code §16600, whereas other states still permit them with certain limitations. Multi-state employers need to navigate both federal enforcement and state-specific nuances.
Retention starts with trust. The best way to keep employees isn’t to lock them in. It’s to create a culture, provide growth opportunities, and establish a compensation structure that makes them want to stay.
Recruiters, dig deeper. Non-compete agreements are a real factor in candidate mobility. Understanding their scope and enforceability can prevent unpleasant surprises in the hiring process.
Looking Ahead
Breaking up with a job is never easy, but non-competes don’t need to make it harder. As the FTC shifts toward targeted enforcement, employers have an opportunity to rethink how they balance protection with fairness.
Because when it comes to keeping great people, the strongest bonds aren’t written into contracts; they’re built on connection and trust.
Curious how this evolving landscape could affect your recruiting or retention strategy? Let’s talk