FTC noncompete rule: Where things stand and what physicians should watch

The Federal Trade Commission (FTC)'s effort to ban noncompete agreements nationally is over, but the practical landscape for physicians evaluating employment contracts has not cleared. If anything, the regulatory retreat has pushed the question back to state law, where the rules vary significantly and are evolving quickly.

The FTC issued its noncompete rule in April 2024, which would have banned nearly all noncompete agreements in employment. A federal district court in Texas permanently blocked the rule in August 2024, finding the agency had exceeded its statutory authority and that the rule was arbitrary and capricious. The FTC initially appealed, but withdrew that appeal in September 2025 under the current administration, formally conceding that the nationwide rule will not take effect.

The FTC has said it will pursue noncompete enforcement on a case-by-case basis under existing antitrust authority, targeting agreements it views as anticompetitive, but that approach affects individual employers rather than industry-wide practice.

Which states restrict or ban physician noncompetes?

For physicians, the more immediate question is what their state allows. A growing number of states have moved independently to restrict or ban noncompetes for health care workers, and the variation is significant. California, North Dakota, Oklahoma and Minnesota prohibit noncompetes broadly. States including Colorado, Illinois and Virginia have enacted income-based thresholds below which noncompetes are unenforceable. Several other states have passed health care-specific restrictions that cap the geographic radius, limit the duration or require buy-out provisions before a noncompete can be enforced.

Texas, where the federal case originated, remains one of the more permissive states for employer noncompete enforcement, provided the agreement meets certain reasonableness standards. Physicians in Texas who assumed the FTC rule would nullify their existing agreements should not rely on that assumption going forward.

What should physicians look for in a noncompete clause?

The structure of the noncompete itself also matters as much as geography. Employment attorneys who work with physicians say the most commonly disputed provisions involve radius definitions that are drawn around a practice's primary location rather than where the physician actually sees patients, duration clauses that extend beyond what courts in that state typically enforce, and patient solicitation restrictions that effectively operate as noncompetes even when the geographic clause is narrow.

APTA's analysis of the FTC's current enforcement posture notes that the agency is now focused on overbroad agreements that harm competition in specific labor markets, which means large health systems with dominant market positions may face greater scrutiny than smaller employers.

For practice administrators and group practice leaders, the noncompete question also arises on the employer side. Practices that use noncompetes to protect patient relationships and investment in physician training should review their template agreements against their state's current law, particularly in states that have enacted recent reforms. A clause that was enforceable three years ago may not be today.

Physicians and practice administrators navigating specific contract situations should consult an employment attorney familiar with health care noncompete law in their state before signing, renegotiating or attempting to enforce any agreement. The gap between what a contract says and what a court will enforce has widened considerably since 2024, and the direction of that trend is not reversing.

One practical step physicians can take before entering contract negotiations is to research their state's current noncompete law independently, since employer counsel and in-house HR staff are not neutral sources on enforceability questions. Several state medical associations publish plain-language guides to physician contract review, and a two-hour consultation with a health care employment attorney before signing typically costs a fraction of what a disputed noncompete can cost to litigate or work around after the fact.