{"id":10698,"date":"2026-05-16T12:33:01","date_gmt":"2026-05-16T12:33:01","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/ftc-issues-warning-letter-regarding-employers-use-of-noncompete-agreements\/"},"modified":"2026-05-16T12:33:01","modified_gmt":"2026-05-16T12:33:01","slug":"ftc-issues-warning-letter-regarding-employers-use-of-noncompete-agreements","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/ftc-issues-warning-letter-regarding-employers-use-of-noncompete-agreements\/","title":{"rendered":"FTC Issues Warning Letter Regarding Employer’s Use of Noncompete Agreements"},"content":{"rendered":"\n
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Summary<\/h2>\n

The Federal Trade Commission (\u201cFTC\u201d) recently warned a mortgage service provider that its reported company-wide use of noncompete agreements may constitute a violation of federal antitrust laws.[1]<\/a> The warning letter was issued in response to information that was made public in an ongoing litigation that had been filed by the company seeking to enforce a noncompete agreement against a former worker. The FTC stated that its warning demonstrates the FTC\u2019s continued commitment to \u201cactively investigat[e] potentially anticompetitive noncompete agreements and bring[] enforcement actions to restore competition when appropriate.\u201d[2]<\/a><\/p>\n

Background<\/h2>\n

Last year, the FTC dismissed its appeals of court decisions that vacated its 2024 rule banning most noncompete agreements. At the same time, the FTC made clear that it intended to pursue individual enforcement actions under Section 5 of the FTC Act in connection with noncompete agreements that are \u201cunjustified, overbroad, or otherwise unfair or anticompetitive.\u201d[3]<\/a> To that end, in February 2025, Chairman Ferguson directed the creation of a Joint Labor Task Force to focus on deceptive, unfair, and anticompetitive labor-market practices, including the use of overly broad noncompete agreements.[4]<\/a> Consistent with that focus, in April 2026, the FTC prohibited a pest control company from enforcing noncompetes with its employees.[5]<\/a> The FTC challenged the company\u2019s practice of barring lower-wage employees like pest control technicians and customer service representatives from taking jobs in the pest control industry for two years after leaving the company.[6]<\/a><\/p>\n

The Mortgage Connect Warning Letter<\/h2>\n

On May 8, 2026, the FTC issued a warning letter to counsel for Mortgage Connect raising the \u201cconcern that [it] may have deployed noncompete agreements in contracts with employees that may unfairly and unreasonably restrain competition.\u201d[7]<\/a> In the letter, the FTC noted that it continues to receive \u201csubmissions from market participants\u2014including in the mortgage services industry\u2014raising concerns that many noncompetes tend to limit competition and unfairly harm workers.\u201d[8]<\/a><\/p>\n

The FTC stated that it issued the letter in response to publicly available information from Mortgage Connect\u2019s lawsuit in Pennsylvania state court seeking to enforce a noncompete agreement against a former employee and a competitor that hired her.[9]<\/a> Although the FTC stated that it was taking no position on the pending litigation, it warned that the evidence raised \u201csignificant competitive concerns.\u201d[10]<\/a> First, the evidence appeared to show that Mortgage Connect requires all employees\u2014regardless of their roles or responsibilities\u2014to sign noncompete agreements.[11]<\/a> According to the FTC, that practice may unfairly burden workers and hamper the ability of smaller competitors and new market entrants to hire experienced employees.[12]<\/a> Second, the FTC questioned whether Mortgage Connect\u2019s asserted business justifications for noncompete agreements could be achieved using less restrictive means. Specifically, the FTC pointed to nonsolicitation or nondisclosure agreements as narrower tools that may address Mortgage Connect\u2019s interest in protecting confidential information, customer goodwill, business reputation, and investments in employee training or specialized skills.[13]<\/a> Third, the FTC was skeptical that a specialized-skills justification was applicable because the former employee at issue in the litigation apparently received no more than basic orientation after joining Mortgage Connect.[14]<\/a>\u00a0<\/p>\n

The FTC encouraged Mortgage Connect to \u201cconduct a comprehensive review of its employment contracts,\u201d including noncompete agreements and other restrictive covenants, to ensure they are compliant with the law and tailored to the circumstances.[15]<\/a><\/p>\n

Implications<\/h2>\n

The recent FTC action further underscores that employers should review their restrictive covenant agreements to ensure that they are not broader than necessary to protect a legitimate business interest and are used for an appropriate subset of the workforce. The FTC warning letter is also notable because it reflects that the FTC is monitoring restrictive covenant litigation.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Summary The Federal Trade Commission (\u201cFTC\u201d) recently warned a mortgage service provider that its reported company-wide use of noncompete agreements may constitute a violation of federal antitrust laws.[1] […]<\/p>\n","protected":false},"author":1,"featured_media":10699,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[718,3800,352,2684,1968,454,5040],"class_list":["post-10698","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lawyers","tag-agreements","tag-employers","tag-ftc","tag-issues","tag-letter","tag-noncompete","tag-warning"],"_links":{"self":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/10698","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=10698"}],"version-history":[{"count":0,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/10698\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media\/10699"}],"wp:attachment":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=10698"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=10698"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=10698"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}