FTC Signals Continued Scrutiny of Employee Non-Competes: Key Takeaways From the Rollins Consent Order

Employers who breathed a sigh of relief when the Federal Trade Commission’s (FTC) nationwide non-compete ban was struck down by a Texas federal court in 2024 should not get comfortable. The agency has not retreated. It has shifted tactics. Rather than pursuing a single rule that applies to everyone, the FTC is now pursuing individual employers, one consent order at a time. The latest target is Rollins, Inc., parent of Orkin, HomeTeam, and Critter Control. The result is a 10-year compliance regime reaching roughly 18,000 workers and a clear template for how the agency intends to police restrictive covenants going forward.

The order binds only Rollins. The signal it sends reaches every employer with a non-compete program.

What the FTC Found

Rollins operates approximately 700 branches and employs more than 18,000 US workers. Following an investigation, the FTC alleged that the company required nearly all of them to sign non-competition agreements, regardless of role or seniority. The restrictions barred former employees from working anywhere in the pest control industry within a 75-mile radius, or in some cases a multi-county region, for two years following termination.

The targets of those restrictions are what made the case. Not executives. Not the policy-setting leadership. Technicians. Sales staff. Customer service representatives. The kinds of employees who have no access to corporate strategy and no realistic ability to negotiate. The FTC characterized this as an unfair method of competition under Section 5 of the FTC Act: a standardized restraint imposed on rank-and-file workers, suppressing wages and mobility in a way no legitimate business need could justify.

Rollins did not admit liability. It did enter into a consent order that reorders its restrictive covenant program for the next decade.

What the Order Requires

The order draws a hard line at the executive level. Non-competition agreements remain permissible only for individuals eligible for equity or equity-based compensation: directors, officers, and senior leaders with meaningful policymaking authority. Other Rollins employees are off limits, including branch managers, service managers, account managers, sales inspectors, and the technicians who actually deliver the service.

Existing agreements with covered employees must be rescinded. Notices must be issued so those employees know the restrictions no longer apply. Customer non-solicitation provisions remain permissible only in a narrowed form, leaving former employees free to compete through general advertising and inbound inquiries. Rollins must file annual compliance reports for 10 years.

The order preserves one familiar carve-out. Non-competes tied to the sale of a business are still permissible, but only where the individual subject to the restriction has a bona fide, preexisting equity interest in the business being sold. The sale-of-business label cannot be used as cover for an ordinary employee restriction.

The Question Every Non-Compete Must Answer

Read past the specifics of Rollins, and the order is best understood as an articulation of the principle that connects the FTC’s federal program, state statutes, and a generation of court decisions: a non-compete is enforceable only to the extent it protects a legitimate business interest.

That principle is the whole game. An enforceable non-compete is not a tool to suppress competition. It is a tailored protection for an identifiable asset. Trade secrets. Confidential information. Customer goodwill built on the employer’s investment. When an employer can articulate the specific interest at stake and tie the restriction to it, the agreement has a defensible reason to exist. When it cannot, the agreement is precisely what the FTC and most courts say it cannot be: a restraint on worker mobility for its own sake.

The practical version of that principle is a self-assessment every employer should be running, role by role, before drafting or enforcing any restrictive covenant. Two questions drive it. What is the protectible interest, if any, that this employee’s role actually implicates? And what restriction, at what level of scope, duration, and geography, is genuinely necessary to protect it?

The answers will not be the same across the workforce, and they should not be drafted as if they were. An employee’s role within the company, the nature and depth of access to confidential information, the breadth of customer relationships built on company resources, and the realistic ability to cause competitive harm on departure all shape both answers. Michigan law captures the same idea. The Michigan Antitrust Reform Act (MARA) permits a non-compete only where it protects “an employer’s reasonable competitive business interests,” and only to the extent the restriction is reasonable in duration, geographic area, and type of employment. The inquiry begins, and often ends, with whether the employer has identified a real interest worth protecting and tailored the restraint to it.

The implication for the audit is concrete. A pest control technician working a service route is not similarly situated to a sales executive carrying the company’s national pricing strategy. The same form non-compete handed to both is the wrong instrument for at least one of them, and likely both. The Rollins order draws exactly that line. So does MARA. So have courts across the country, for years.

Where This Leaves Employers

The Rollins matter establishes that the FTC, despite the setback to its nationwide rule, intends to enforce its position case by case. The themes the agency is signaling are consistent: standardized non-competes imposed across an entire workforce will draw scrutiny; restrictions on non-executive and lower-wage workers will draw more; restraints that exceed what is necessary to protect a defined interest will be challenged; and the sale-of-business carve-out will not be allowed to swallow the rule.

The right time to evaluate a restrictive covenant program is before the agency, a court, or a departing employee forces the question.

• Identify the protectable interest: Before drafting or enforcing any restrictive covenant, articulate the specific asset at stake. Trade secrets. Customer goodwill. Confidential pricing or strategy. Substantial training investment. A covenant untethered from a defined interest is the most exposed, both to FTC scrutiny and to a state court reasonableness challenge.
• Audit existing agreements: Identify which employees are subject to non-competes and whether each agreement remains consistent with the Rollins template. Pay particular attention to non-executive populations.
• Right-size scope, duration, and geography: A two-year, 75-mile restriction appropriate for a regional sales executive is unlikely to survive scrutiny when imposed on a technician. Tailor each restriction to the employee whose access actually warrants it.
• Strengthen the alternatives: Confidentiality agreements, trade secret protections, intellectual property (IP) assignments, and well-drafted non-solicits often do more real protective work than a non-compete and draw far less regulatory fire.
• Watch both flanks: State law trends are moving in different directions across jurisdictions. Practices that pass muster in one state may not in another, and practices that survive state law scrutiny may still attract the FTC’s attention.

Bottom Line

The Rollins consent order is not the FTC’s last word on non-competes. It is the agency’s working playbook. Employers who treat their restrictive covenant programs as legacy contract terms rather than active legal exposure are accumulating risk in an environment that increasingly rewards precision and punishes overreach. The agreement that protects a defined interest, narrowly drawn, will hold. The agreement that protects competitive comfort will not.

Questions about your restrictive covenant program in this environment? Contact the authors or your Butzel attorney. Butzel’s Non-Compete/Trade Secret team is tracking every development and ready to help you navigate what comes next.

Please feel free to contact the authors of this Client Alert or your Butzel attorney for more information.

Sarah Nirenberg
248.258.2919
nirenberg@butzel.com

Blake Padget 
248.258.1305
padget@butzel.com

Michelle Cirino
313.225.5306
cirino@butzel.com