On April 15, the Federal Trade Commission (FTC) issued an order to Rollins, Inc., a pest control company with over 18,000 employees nationwide, to stop enforcing noncompete agreements. Rollins mandated that nearly all its employees, regardless of pay, position or responsibilities, sign noncompete agreements. These noncompete agreements typically prohibit employees from working in pest control within 75 miles from one of Rollins’ approximately 700 locations across the country for at least two years.
In its complaint, the FTC alleges that the noncompete agreements are unfair and anticompetitive because they alter the bargaining position between employees and Rollins; deny employees access to job opportunities and restrict their mobility; cause lower wages and salaries, reduced benefits, less favorable working conditions, and personal hardship to employees. In addition, the FTC alleges the noncompete agreements likely suppress competition by impeding the entry and expansion of Rollins’ competitors in the pest-control industry. The FTC recommends Rollins rely on tailored non-solicitation agreements to protect its customer relationships and other competitively sensitive information.
The FTC’s proposed consent order states that Rollins must cease and desist from enforcing existing noncompete agreements and entering into new ones, and that Rollins must give notice to current and former employees that they are no longer subject to a noncompete agreement and that they can compete against Rollins, including by starting their own businesses. The FTC also issued warning letters to 13 other pest control companies, advising them that their noncompete agreements may contain harms similar to Rollins’.
The order against Rollins comes as a part of increased hostility towards noncompete agreements by the Trump-led FTC, and mirrors increased hostility at the state level. For example, the Utah legislature recently passed two bills banning or limiting noncompete agreements in the health care and veterinary industries and proposed another bill eliminating most noncompete agreements in the state.
Employers should review current and former noncompete agreements to ensure they are properly tailored and be aware the law in this area is changing rapidly. As the FTC states, relying on less intrusive non-solicitation agreements can provide protections without presenting risks of invalidation or negative enforcement.
