The approach of the U.S. Federal Trade Commission to policing noncompete clauses has shifted, from a broad nationwide ban to focused enforcement against unlawful noncompetes. In April 2024, the FTC introduced a rule intended to ban most noncompetes across the U.S. The rule faced several legal challenges, and, in August 2024, a U.S. District Court held the rule was unlawful. On Sept. 5, 2025, the FTC withdrew its appeal of the court ruling, effectively abandoning its nationwide ban. Statements accompanying the FTC’s decision to withdraw emphasized that the FTC lacked authority for a sweeping rule but would still police illegal noncompetes through enforcement of Section 5 of the Federal Trade Commission Act of 1914.

On Sept. 4, 2025, the FTC launched a public inquiry through its joint labor task force. The stated purpose of the inquiry was to gather data to “understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions [emphasis added].” The task force is encouraging members of the public—including employees currently and previously restricted by noncompete agreements—as well as employers facing hiring difficulties due to competitors’ noncompete agreements to share information about the use of noncompete agreements. As a result of this information collection effort, employers may find themselves in the agency’s crosshairs.

The FTC is also distributing letters to many large employers and staffing firms in the health care sector notifying them that the FTC has information that “suggests that many health care employers and staffing companies include noncompete agreements in employment contracts that may unreasonably limit employment options for vital roles like nurses, physicians, and other medical professionals.” The FTC states that it intends to focus resources on enforcing Section 5 of the FTC act against unlawful noncompetes, particularly in the health care sector. Although the FTC acknowledges that narrowly tailored noncompetes can serve a valid purpose in certain circumstances, the agency encourages companies to conduct comprehensive reviews of their noncompetes and restrictive covenants to ensure they are justified and not overbroad or otherwise unfair or anticompetitive.

In light of the FTC’s activities, staffing firms should ensure their noncompetes pass legal scrutiny under both federal and state laws. Noncompete clauses are particularly likely to be struck down in states like California, Minnesota, North Dakota, and Oklahoma, which have some the most restrictive rules regarding the use of noncompetes.

Earlier this month, the U.S. Department of Labor unveiled its Unified Agenda of Regulatory and Deregulatory Actions, which “provides the American people with a transparent look at regulations being considered by the Administration and ensures the public is engaged throughout the process.” This regulatory agenda, which is similar to a to-do list for the department, can be found here.

Twice a year, federal agencies are required by law to let businesses, workers, and the public know about which rules are being written or changed, when that might happen, how people can give input (usually through public comment periods), and why it matters. This semiannual agenda lists two items of interest for the staffing industry and their clients: joint employer status under the Fair Labor Standards Act and employee or independent contractor classification under the FLSA.

As many staffing firms know, the rules and regulations around joint employer status seem to go back and forth depending on what political party is occupying the White House. Most recently, a joint employer rule issued in 2020 which made it harder for a company to be considered a joint employer was rescinded in July 2021. According to the agenda, DOL is “considering a notice of proposed rulemaking to adopt regulations that would guide the Wage and Hour Division’s enforcement of joint employer liability.”

When it comes to independent contractors, the agenda notes that the current independent contactor rule is the subject of several ongoing legal challenges. According to the agenda, “the Department intends to rescind the 2024 Independent Contractor rule and is considering how it will proceed with examining the circumstances under which a worker should be classified as an employee or independent contractor for the purpose of federal wage and hour requirements.”

(Note: ASA Policy Edge is a new content feature designed to keep members ahead of legislative developments that could affect their business.)

The federal government’s fiscal year closes Sept. 30, and as of this moment, there is no plan to fund the government through fiscal year 2026. If a funding agreement is not in place by Oct. 1, the federal government will be faced with a shutdown. The U.S. Congress could avoid a shutdown by passing all 12 pending appropriations bills and having the president sign them into law before Sept. 30, but that has not happened since 1996. If a shutdown is to be averted, it will require Congress to pass a continuing resolution, which would extend current funding levels to a specific date, but there are still several factors Congress must consider before it can move forward.

A shutdown would inject even more uncertainty into the economy and would mean that other legislative issues would be stuck in a holding pattern. That would be problematic, because one of the legislative items expected to be considered this fall is a bipartisan tax extenders package that would likely contain an extension, and possible expansion, of the Work Opportunity Tax Credit program currently set to expire at the end of 2025. As of now, the House of Representatives is scheduled to be in session for 14 days during the month of September, and the Senate will be in session for 16 days. Is that enough time to reach an agreement to keep the government open? ASA will keep its members updated.

(Note: ASA Policy Edge is a new content feature designed to keep members ahead of legislative developments that could affect their business.)