FTC Warnings on Non-Compete Practices in Healthcare and Staffing

The Federal Trade Commission (FTC) has issued formal warnings to a group of healthcare employers and staffing agencies, urging them to review their use of non-compete clauses in employment contracts. Regulators argue that such practices could unlawfully restrict worker mobility, reduce wage growth, and harm competition in industries already facing critical labor shortages.

The move comes as part of the FTC’s broader push to rein in restrictive covenants across the U.S. workforce, a campaign that has intensified in 2025 as hiring cools and employees struggle to find new opportunities.

Background: What Are Non-Compete Clauses?

Non-compete clauses are provisions in employment contracts that prevent workers from joining a competitor or starting a competing business for a set period after leaving a job.

While these agreements were traditionally used to protect trade secrets or sensitive information, they have become increasingly common in sectors like healthcare, hospitality, and staffing—fields where intellectual property is less central.

Critics argue that non-competes limit worker choice, suppress wages, and trap employees in jobs they want to leave.

Why Healthcare and Staffing Are Under Scrutiny

The FTC’s warnings highlight healthcare and staffing for two reasons:

• Essential Services: Hospitals, nursing agencies, and clinics face severe shortages of doctors, nurses, and technicians. Restricting workers from moving freely between employers exacerbates these shortages.
• Recruitment Practices: Staffing agencies, particularly in travel nursing and temporary healthcare roles, often use non-competes to hold onto employees, making it difficult for them to switch to better-paying opportunities.

By targeting these industries, regulators hope to ease workforce mobility in some of the country’s most stressed labor markets.

What the FTC Is Demanding

The FTC has not yet imposed penalties but has sent letters of warning, putting companies on notice that:

• Non-compete agreements may violate Section 5 of the FTC Act, which bans unfair methods of competition.
• Employers should immediately review existing contracts and policies for compliance.
• Workers have the right to report suspected violations directly to the agency.

If companies fail to adjust practices voluntarily, enforcement actions could follow, potentially leading to lawsuits or financial penalties.

Implications for Workers

For employees, the FTC’s intervention could open doors:

• More Freedom to Switch Jobs: Workers in healthcare and staffing may soon be able to leave restrictive contracts behind and pursue better offers.
• Greater Wage Competition: As mobility increases, employers may be forced to raise pay to retain talent.
• Improved Work Conditions: Companies that can no longer rely on restrictive clauses may invest more in retention strategies, such as flexible schedules and improved benefits.

This development is particularly significant for nurses, technicians, and temporary healthcare staff, who often feel trapped by agency contracts.

Implications for Employers

For employers, the FTC’s move presents challenges:

• Rising Turnover Risks: Companies will need to compete harder to retain skilled workers.
• Compliance Costs: Legal reviews of contracts and HR practices could be expensive and time-consuming.
• Shift Toward Positive Retention: Firms may need to rely on culture, career development, and compensation rather than restrictive clauses to keep employees.

The long-term result could be a more dynamic labor market, but in the short term, employers may feel pressure.

How This Fits into the Larger Regulatory Push

The FTC’s warnings are part of a broader federal agenda:

• Ban on Non-Competes: Earlier in 2025, the FTC signaled support for a nationwide ban on most non-compete agreements.
• Focus on Vulnerable Workers: Regulators are prioritizing industries like healthcare, retail, and staffing—sectors where workers often have less bargaining power.
• Alignment with States: Several states, including California, already ban most non-competes. The FTC is moving to bring national standards closer to these models.

FAQs About FTC Non-Compete Warnings

A Travel Nurse’s Experience

Samantha, a travel nurse in Texas, signed a contract with a staffing agency that included a non-compete clause. After completing her assignment, she wanted to move to another hospital offering higher pay, but the agency blocked her, citing her agreement.

With the FTC’s warnings, cases like Samantha’s could soon be challenged. If non-competes are rolled back, she and thousands of others in similar positions will gain more freedom to choose where they work.