This is an exclusive BHB+ story

The Trump administration has undone the near-total ban on noncompete agreements in the U.S. originally enacted by the Biden administration. Now, it is taking the pulse of American industry before deciding on these restrictive workplace covenants.

Until then, the federal rules around the use of noncompetes are effectively back to the status quo. While the Trump administration appears to take a skeptical view of the broad use of noncompete agreements, it has left enough uncertainty around the matter to make it worth keeping an eye on in the future.

While more common in executives and highly technical or other favored roles, legal experts told Behavioral Health Business that noncompetes often lurk unnoticed in first-day paperwork for less privileged staff and can have major ramifications for those workers and the wider economy.

For the behavioral health industry, the incursion of new funding and more corporate influence brings with it other vestiges that have not been as common in the industry in the past. Noncompete agreements add a potentially negative aspect to the workforce of behavioral health at both the clinical and the corporate levels as investors and their executive partners seek to protect the investments in companies, markets and staff.

“People don’t think about it in terms like this, but employees essentially have a service they are providing to employers,” Eric Kingsley, partner at Kingsley Szmet, told Behavioral Health Business. “When you have a company that makes an employee agree to not work for some other employer if you leave my services, you essentially devalue labor in such a way that you’re driving the price of that labor down because you’re going to make it very difficult for labor to negotiate raises and to move to another employer.”

On top of that, geographic terms often included in noncompetes may drive employees to abandon either their respective careers or communities to continue their work but not run afoul of an ex-employer.

“Mobility would become very, very difficult for folk.,” Kingsley added. “You might have to move really long distances in order to be able to get a job.”

In April 2024, the FTC voted 3–2 to adopt a final rule banning new noncompete agreements and invalidating most existing ones, except for those involving senior executives. Initially proposed in January 2023, the rule was scheduled to take effect in late August 2024.

However, before the rule took effect, Judge Ada Brown of the Northern District of Texas struck down the FTC’s noncompete ban, ruling that the agency exceeded its legal authority and acted arbitrarily and capriciously. The decision fully vacates the rule, following an earlier partial injunction in July. Brown concluded that while the FTC can issue procedural regulations, it lacks the power to create substantive competition rules under the Federal Trade Commission Act.

The Trump administration announced in September 2025 that it would stop defending the multiple legal challenges to Biden’s noncompete ban, killing the rule.

But that wasn’t the only thing the Trump administration, via the Federal Trade Commission (FTC), did in September.

At the same time as its announcement to back off the noncompete ban, the FTC released a request for information that doesn’t appear to be attached to a specific proposal.

“Unreasonable noncompete agreements have proliferated for too long in the dark,” the agency said at the time. “With the assistance of the employees and workers most burdened by them, the Trump-Vance FTC intends to uproot the worst offenders and restore fairness to the American labor market.”

The FTC’s questions include employer names, details about the roles to which the noncompetes were applied, geographic and time-bound terms, and opinions about the impact of such agreements. The question set also includes specific questions about public opinion regarding health care providers. The deadline for submissions is Nov. 3.

Five days after announcing their end to the legal fight over the noncompete ban, the FTC announced that it had sent warning letters to an untold number of “large health care employers and staffing firms,” according to a news release.

A template version of the letter states, in part, that “available evidence indicates that in practice many employers impose noncompetes without due consideration to whether they are necessary and appropriate under the circumstances, including whether less restrictive alternative contract terms may sufficiently achieve the same procompetitive purposes.”

Emily Tichenor, an attorney and shareholder at the health care law firm Polsinelli, pointed out to BHB that the FTC warning letters’ stated concern with rural and underserved markets aligns with concerns that many in behavioral health have when it comes to care access.

This sentiment from the FTC aligns with Tichenor’s general reading of the court when it comes to the use and enforcement of noncompetes with clinicians.

“When you’re enforcing medical staff noncompetes, courts are very mindful of patient choice; it’s something that comes up,” Tichenor said. “So sometimes it can be hard to enforce either noncompetes or non-solicits against health care professionals because courts will say, ‘Hey, patients can choose, and I’m not going to get in the way of that.”

Across health care, especially in and among hospital systems, consolidation makes the impact of any employer’s post-employment agreements particularly powerful. This makes noncompetes a “compounded issue,” Lauren Aydinliyim, associate professor of management at the Zicklin School of Business at Baruch College, told BHB.

While the departure of a physician from a practice can present challenges, the act of consolidation can challenge even a physician’s ability to resist restrictive agreements. Specifically, Aydinliyim highlighted how acquiring organizations may consider changing terms of employment, including advantageous noncompetes, to coerce doctors to stay at the organization or using the threat of being let go if the agreement is not signed.

“That’s not even getting into the fact of whether or not these are enforceable or not,” Aydinliyim said. “That’s a whole other question.”

For example, noncompetes are banned in California. Because employees often don’t know their rights, they may believe they are subject to them when, in reality, they are not.

“We have to assume a lot of information asymmetries,” Aydinliyim said. “If employees don’t know that their noncompetes are not enforceable, most people assume, when they’re handed a contract by their employer, that it’s been vetted by an attorney or that there’s a reason that they’re being asked to sign it and then go ahead and do so.”

While it’s not clear what changes may be coming, Aydinliyim noted that the FTC is willing to take action on the use of noncompetes that are too broad, even within niche industries.

The FTC filed a complaint against Gateway Services, the largest pet cremation services provider in the U.S., saying that its nearly universal noncompete forbidding ex-employees from working in the pet cremation industry for a year after leaving the company was “anticompetitive.” Gateway employs about 2,000 people and operates 100 locations in the U.S. that serve about 17,000 veterinary locations.

The FTC specifically said these noncompetes “unfairly alter the bargaining positions between employees and Gateway.” It also freezes out any other competitors.

The legal experts BHB spoke with said there are several other legal and human tools to balance a company’s interest in incentivizing retention and protecting its proprietary interests.

On the former point, companies that train employees can establish repayment agreements if a certain timeframe of employment is not met. More on the “carrot” side, clear progressions in pay and retention bonuses make the benefit of staying in a job clear.

“Generally, have a workplace people want to be,” Tichenor said. “Turnover is expensive regardless of whether or not [an employee] is going to a competitor or not.”