The Federal Trade Commission's (FTC) recent action against a nationwide extermination company is less about pest control and more about how aggressively the agency plans to scrutinize non-compete agreements moving forward. For employers relying on broad or uniform non-compete agreements, the message is clear: even in the absence of a nationwide ban, non-compete agreements remain an active enforcement target with real operational and reputational consequences.
In its recent, significantly revised enforcement order, the FTC required Rollins, Inc. (Rollins), a nationwide pest extermination company, to cease enforcing non-compete agreements against more than 18,000 employees nationwide. In connection with this action, the FTC also sent warning letters to 13 other companies in the pest control industry, instructing them to immediately review their restrictive covenant practices.
Background of the FTC's Allegations
According to the FTC's administrative complaint, Rollins required virtually all newly hired employees to execute non-compete agreements as a condition of employment. These agreements applied across the workforce, including pest control technicians, customer service representatives, and other comparatively low-wage or hourly employees. The restrictions typically prohibited employees from working in the pest control industry for a period of two years within a 75-mile radius of any Rollins location.
The FTC alleged that employees were not provided an opportunity to negotiate the agreements, received no additional compensation or consideration in exchange for the restrictions, and, in some instances, were presented with the non-compete agreements in the field and instructed to sign immediately. After employees separated from the company, Rollins allegedly sought to enforce the agreements through cease-and-desist letters and litigation.
The FTC charged this conduct as an unfair method of competition in violation of Section 5 of the Federal Trade Commission Act.
Employer Consequences as a Result of the Consent Order
Under the proposed consent order, Rollins is prohibited, for a period of ten years, from entering into, maintaining, or enforcing non-compete agreements with covered employees, which it defined as all employees or prospective employees, except directors, officers, or other senior leaders who are eligible for grants of equity or equity-based interests in Rollins as a benefit of employment.
The order also requires Rollins to provide notice to all current and former covered employees that their non-compete agreements are void and unenforceable, and that they are free to seek competitive employment or establish their own businesses.
While the order applies only to the nationwide extermination company, its significance extends well beyond one employer. The remaining 13 warning letters issued to other pest companies in the industry are a clear indication that the agency is using targeted enforcement, not rulemaking, to influence employer behavior.
Broader Regulatory Context: Why This Matters Despite the Failed FTC Rule
Although the FTC's 2024 rule attempting to ban most non-compete agreements nationwide was invalidated by the courts, this enforcement action underscores that non-competes remain a priority area for the agency. At a January 2026 FTC workshop, the chair of the Commission emphasized that employers choosing to use non-compete agreements should be prepared to justify both their necessity and scope.
The FTC has been clear that it intends to pursue restrictive covenant issues on a case-by-case basis. Prior to the nationwide extermination company matter, the FTC had brought a similar action against a national pet cremation company based on the use of broad, blanket non-compete agreements. The agency has also issued warning letters and conducted investigations involving health care employers and staffing companies.
What Employers Should Do Now
Employers should carefully reassess and consider audits of their current use of non-compete agreements and the specific language therein in light of the FTC's enforcement posture. In particular:
- Blanket non-compete policies applied uniformly across the workforce, including to low-wage or hourly employees without access to trade secrets or meaningful customer relationships, present heightened regulatory risk.
- The duration, geographic scope, and substantive restrictions of any non-compete should be narrowly tailored to a legitimate, demonstrable business interest. Overly broad restrictions – such as multiyear, wide-radius prohibitions for frontline employees – are unlikely to withstand scrutiny.
- Employers should consider whether less restrictive alternatives, such as narrowly drafted non-solicitation or confidentiality agreements, can adequately protect business interests.
- Employees should be given a meaningful opportunity to review and consider restrictive covenant agreements in advance of signing. Practices that pressure employees to sign immediately, particularly in the field or without adequate explanation, may be cited as evidence of unfair or coercive conduct.
This recent FTC enforcement activity reflects a broader trend. Regulators are using targeted enforcement to reshape long-standing employment practices. Employers that reassess that now, before security or enforcement begins, will be better positioned to protect their workforce strategies and reduce downstream risk.
For more information on how this enforcement activity could impact you or your business, please contact Chaitra Gowda, Alex Cranford, or any member of Baker Donelson's Labor & Employment Group.