Since the Federal Trade Commission’s (FTC) rule banning noncompetes was finalized in April 2024, it has faced significant litigation, and several courts have found the ban invalid. Our firm has extensively covered these developments as the regulatory landscape evolves.
While the ban itself has encountered setbacks, the FTC’s focus on noncompete agreements continues. Recent enforcement action shows that the FTC is attempting to swat noncompete agreements in the pest control industry.
Last month, the FTC took a stand against noncompete agreements in the pest control industry by proposing a decision and order that will force Rollins Inc.—the parent company of several pest control brands, including Orkin, HomeTeam, and Critter Control—to cease and desist from using and enforcing noncompete agreements with its employees.
In its proposed complaint, the FTC focused on these aspects of the Rollins noncompete:
- Geographic Scope: The coverage area being a 75-mile radius from one of Rollins’ more than 700 U.S. locations.
- Employee Coverage: The scope of employees, including many low-level, low-earning employees.
- Negotiation and Compensation: The lack of ability for the employees to negotiate or be compensated for signing the noncompetes.
- Litigation: The hundreds of lawsuits initiated by Rollins seeking enforcement of the noncompetes.
- Suppression: The likely effects on wages and competition due to both the suppression of competition and the lack of competitive opportunities.
According to the FTC press release, this focus aligns with the current Trump-Vance administration’s goals of encouraging small business formation and enhancing employee mobility and job growth.
Under the proposed FTC order, Rollins must, among other things:
- “[C]ease and desist 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 noncompete agreement
- “[P]rovide notice to current and former employees that they are no longer subject to a noncompete agreement and they can compete against Rollins, including by starting their own business.”
For employers, the Rollins matter may reflect a broader enforcement trend: while the FTC’s nationwide noncompete ban remains tied up in litigation, the agency appears to be prepared to continue evaluating and regulating noncompetes on a case-by-case basis.
Notably, the FTC paired the Rollins action with warning letters to 13 other companies in the pest control industry, signaling that it may continue to scrutinize and apply enforcement actions against noncompete agreements.
BFV’s Noncompete/Trade Secrets team is monitoring noncompete developments nationwide and will continue to provide updates as they emerge. If you have questions about how your business uses noncompetes, we are available to assist you.
BFV Summer Associate Yunseo Ki, a student at Emory University School of Law, contributed to this post.
Work hard at work worth doing. This is what drives Daniel Park in every aspect of his life. At Berman Fink Van Horn, Daniel demonstrates this in everything he does.
