Noncompetes After the FTC Ban: What Rollins Teaches Companies to Audit Now.

If your company hands the same noncompete to everyone, from the executive suite down to the hourly crew, that one-size template is now the exact fact pattern federal antitrust enforcers are scrutinizing.

In April 2026, the Federal Trade Commission issued a complaint against Rollins, Inc., the parent of Orkin and one of the largest pest-control companies in the country, and accepted a proposed consent order that would bar the company for ten years from enforcing the two-year, 75-mile noncompetes it had imposed on the vast majority of its 18,000-plus workforce, down to pest-control technicians and customer-service representatives.

Here is the part that catches people off guard. The blanket federal noncompete ban everyone remembers is dead. A federal court struck it down in 2024, and the FTC walked away from it in 2025. So a lot of employers filed the whole subject under "resolved."

That read is backwards. The rule is gone. The enforcement is just getting started, and Rollins is the template.

One template. More than 18,000 workers. No exception for whether the worker ever touched a trade secret.

This affects founders deciding what goes in the next offer letter, operators who own the employee handbook, and any board or investor about to diligence a company whose workforce signed boilerplate restrictions. The decision sitting on the desk is easy to state and easy to put off: do your agreements look like the ones the FTC just went after, and what would you change before an enforcer, or a departing employee's lawyer, reads them for you?

What Happened to the Federal Noncompete Ban?

Start with what came off the table. In April 2024, the FTC issued a rule that would have banned most noncompetes nationwide. A federal court in Texas set that rule aside in August 2024, holding the agency had no authority to make substantive rules about competition (Ryan, LLC v. FTC, N.D. Tex.). In September 2025, the FTC dropped its appeal and accepted the vacatur. There is no federal noncompete ban currently in effect.

What replaced the rule is enforcement, one employer at a time, under Section 5 of the FTC Act, the law against unfair methods of competition. In 2025, the agency stood up a labor task force, used consent orders and warning letters to pressure employers with broad worker noncompetes, and invited public input on noncompete practices. Rollins, in April 2026, is the clearest signal yet.

The Rollins order is the one to study, because the agency wrote down exactly what it wants. The proposed consent order, published in the Federal Register on April 22, 2026 with a comment period that closed May 22, runs for ten years and would require Rollins to:

• Stop entering, maintaining, enforcing, or even threatening to enforce the noncompetes against covered workers.
• Send every covered worker, within 60 days, a letter stating they are released and free to compete.
• Preserve only narrowly drawn non-solicitation and confidentiality terms, plus a carve-out for genuine senior leaders (officers and directors who hold real policy-making authority and are eligible for equity).

Two things about the posture matter. First, this is a proposed order, accepted for public comment and subject to final Commission approval, not a litigated judgment. Second, Rollins admitted no wrongdoing; a consent order settles the charges without a finding that the law was broken. Neither point softens the signal. The agency just published its playbook, and it picked one of the largest employers in its target industry to run it on.

Why Does a Vacated Rule Still Expose Employers to FTC Risk?

The risk moved. It did not disappear. For two years the conversation was about a rule that might ban everything; now there is no rule, which feels like relief. That feeling is the trap.

The mistake is reading "the ban was struck down" as "noncompetes are fine again." What the FTC is actually saying is narrower, and more dangerous to a sloppy template. Chairman Ferguson put it bluntly in the Rollins matter: requiring every single worker to sign a noncompete, regardless of position or responsibilities, "cries out for scrutiny." What draws the agency's fire is the role-blind agreement that everyone signs, whatever their job.

The decision point is whether you can name the protectable interest behind each noncompete you use. The FTC's complaint against Rollins is a lesson in what happens when you can't. The agency pointed out that Rollins had published its pest-control methods on its own website and in YouTube videos, so there was no secret to protect, and that Rollins trained its people the same whether or not they were bound, so the noncompete wasn't protecting a training investment either. The agency's conclusion: a narrowly tailored non-solicitation agreement would have covered any real interest in customer relationships. The noncompete was doing work the business could not justify.

Here is what that looks like in practice. A company adopts one noncompete template, HR staples it to every offer letter from the regional manager down to the first-week technician, nobody negotiates it, and later nobody can explain what the technician's version was guarding. That is the Rollins shape. The risk shows up the moment a regulator, or a former employee's lawyer, asks the company to articulate the protectable interest and the company has nothing to say.

The counterpoint matters, because this is not a blanket condemnation of noncompetes. The Rollins order itself carves out genuine senior leaders, and it leaves untouched noncompetes tied to the sale of a business where the seller holds a real equity stake. Narrowly tailored non-solicitation and confidentiality terms survive too. A restriction tied to a real risk stands on solid ground. A broad one slapped on the whole payroll does not.

That reasonableness test now has shape. In a statement accompanying the policy shift, Commissioner Mark Meador laid out the factors that point toward a noncompete being fair: a term no longer than one to two years, a geographic reach no wider than where the employer operates or the employee actually worked, a tie to the employer's specific industry and the employee's specific role, application to genuinely skilled employees, and a real interest that a less restrictive tool like an NDA could not protect. Flip each of those and you have the unfair side of the ledger: multi-year terms, geography past the footprint, restrictions on work unrelated to the job, and coverage of low-wage workers with no access to anything confidential. Meador's statement does not itself create a binding rule. It matters because it shows how at least one Commissioner thinks the agency should weigh these clauses: a rebuttable presumption of illegality, with the employer bearing the burden to show the restriction is reasonably necessary and narrowly tailored. Practically, that puts the burden to justify the clause on you.

And the federal question is only half the exposure. State law adds a second layer, and it runs in both directions. Some states, including California, Minnesota, North Dakota, and Oklahoma, broadly void most employee noncompetes. Others narrowed enforceability over 2024 and 2025 by sector, wage level, or worker category, especially in healthcare, and Virginia extended its ban to every worker who qualifies for overtime under the Fair Labor Standards Act. Florida went the other way, strengthening enforceability for certain higher earners. The takeaway is simple: a company with a multi-state workforce cannot answer the noncompete question from the federal posture alone. Which state's law reaches which worker is the question to put to local counsel.

Our read is that the companies most exposed are the ones that scaled fast on a single HR template and never revisited it. The ones least exposed already match each restriction to a real interest and a real role. The gap between those two is a drafting decision, and you can close it before anyone forces you to.

What Questions Reveal Whether Your Noncompetes Create FTC Risk?

Five questions a leadership team can work through without retaining counsel, even if the answers send you to counsel.

1. Does the same noncompete cover every role? If the hourly worker and the senior executive sign the identical restriction, that uniformity is the single loudest flag the FTC has named.
2. Can you state the protectable interest for each group? Name the trade secret, customer relationship, or specialized training each noncompete guards. If you can't name it, you can't defend it.
3. Do duration and geography match where you actually compete? Measure the clause against Commissioner Meador's reasonableness factors: one to two years, and no wider than your real operating footprint.
4. Are low-wage or rank-and-file workers swept in? Coverage of workers with no access to anything confidential is the fact pattern the agency keeps citing as unfair.
5. Would a non-solicitation agreement or NDA do the job instead? If a less restrictive tool protects the real interest, the FTC's own analysis says the noncompete is the wrong instrument.

What Should a Noncompete Audit File Include?

The fastest way to get ahead of this is to build one file before anyone asks for it. Put leadership, HR, and counsel on it, and have them assemble:

1. The current noncompete template, plus any older versions still in force.
2. A role list showing who actually signs it.
3. A map of which states your workers sit in.
4. The protectable interest for each covered role, written in a sentence.
5. The duration and geographic reach by role.
6. A less-restrictive-alternative check for each role: would a confidentiality term, a non-solicitation clause, or an invention-assignment agreement do the job instead?
7. A short note explaining what changed, what you kept, and why.

If you are heading into a financing or a sale, this is the file to build before the other side's counsel asks for it. It is also what turns a vague worry into something a board can actually act on.

How Does Noncompete Enforcement Affect Founders, Operators, and Investors?

What Should Founders Review in Their Offer Letter Noncompete?

Your offer letter is a governance document, not just a hiring formality. If you are using a one-size template inherited from an old employer or a form library, the noncompete clause is the line to revisit before your next wave of hires, because the same document resurfaces in fundraising and acquisition diligence. Tying each restriction to a role and a real interest now is far cheaper than explaining a workforce-wide clause to an acquirer's counsel later.

What Steps Should Operators Take to Fix Their Noncompete Template?

You own the template HR actually uses, and that template is the exposure. The cleanup is mostly mechanical: list which roles sign a noncompete, strip it from the roles with no business justification, and move those workers to tailored confidentiality and non-solicitation terms where appropriate. If you operate in more than one state, the same pass has to account for state bans that may already make your clause unenforceable for part of your workforce.

What Noncompete Questions Should Investors Raise During Diligence?

A target company's noncompete practices are now a diligence line item. Workforce-wide restrictions on low-wage employees are a live regulatory liability, a potential post-close cleanup cost, and a complication for the labor-and-employment reps in a deal. Add the question to the list: how broadly does the target impose noncompetes, and can it justify each one? The answer tells you whether you are buying a retention tool or an enforcement risk. Note too that the sale-of-business carve-out the FTC recognizes applies only where the departing owner holds a preexisting equity interest.

Practical Takeaways

1. If your offer letter applies one noncompete across roles, then pull it and list every role that signs, before your next handbook or template refresh. Uniform, role-blind coverage is the exact pattern the FTC targeted at Rollins.
2. If a covered group has no access to trade secrets or genuine customer relationships, then move those workers to a tailored non-solicitation or confidentiality clause, by your next employment-template review. The FTC pointed to that exact substitution as the less restrictive alternative.
3. If your noncompete runs longer than two years or reaches past your operating footprint, then test it against Commissioner Meador's reasonableness factors and document the business reason, before you rely on it. Under a rebuttable-presumption approach, the burden to justify the clause is yours.
4. If you are buying or selling a company, then add the target's noncompete practices to the diligence checklist now, before signing. Price workforce-wide restrictions on rank-and-file workers as a cleanup cost, and confirm any sale-tied noncompete sits with an owner who actually held equity.
5. If your workers sit in more than one state, then map your clause against each state's noncompete law, including the recent healthcare and overtime-worker limits, before you try to enforce it. State bans and the FTC's posture stack; clearing one does not clear the other.

Frequently Asked Questions

Is there still a federal ban on noncompetes in 2026?

No. The FTC's 2024 rule that would have banned most noncompetes nationwide was set aside by a federal court in Texas in August 2024 (Ryan, LLC v. FTC), and the FTC dropped its appeal in September 2025. No federal noncompete ban is currently in effect. What replaced the rule is case-by-case enforcement under Section 5 of the FTC Act, the law against unfair methods of competition.

What makes a noncompete more likely to be treated as reasonable?

In a statement on the policy shift, Commissioner Mark Meador pointed to factors that favor a noncompete: a term no longer than one to two years, a geographic reach no wider than where the employer operates or the employee worked, a tie to the specific industry and role, application to genuinely skilled employees, and a real interest that a less restrictive tool like an NDA could not protect. The statement is not a binding rule, but it signals a rebuttable-presumption approach in which the employer carries the burden to justify the restriction.

Does federal posture mean I can ignore state noncompete law?

No. State law is a separate layer that runs in both directions. California, Minnesota, North Dakota, and Oklahoma broadly void most employee noncompetes; other states narrowed enforceability across 2024 and 2025 by sector, wage level, or worker category, especially in healthcare; Virginia extended its ban to overtime-eligible workers; and Florida strengthened enforceability for certain higher earners. A multi-state employer has to map its clause against each state's law, because state bans and the FTC's posture stack.

Closing Perspective

Deregulation was never the real story here. The FTC put down a blunt rule and picked up a scalpel, and a scalpel picks targets. The companies that read the vacated rule as permission to stop thinking about noncompetes are the ones most likely to end up as the next public order.

What I keep coming back to is how avoidable this is. The fix is not expensive and it is not a fight. It is an afternoon with your standard agreement, a list of who signs it, and an honest answer to one question for each group: what are we actually protecting? Where the answer is real, the restriction is defensible. Where it is "we've always done it this way," that is the clause to rewrite before someone else reads it for you.

The signal worth watching is how far the agency travels beyond pest control and pet services into other industries that run on the same workforce-wide template. When it does, the employers who already cleaned house will barely notice. The ones who waited will be reading their own name in the press release.

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This article is for informational purposes only and does not constitute legal advice. Every company's situation is different, and you should consult with qualified legal counsel before making compliance decisions based on the developments discussed here.