FTC Takes Action Against Noncompete Agreements, Securing Protections for Workers

The Federal Trade Commission today ordered Rollins, Inc.—one of the largest pest-control companies in the United States—to stop enforcing noncompete agreements against more than 18,000 employees nationwide. The agency also sent warning letters to 13 other companies in the pest-control industry that employ many thousands more workers, urging the firms to review their employment agreements to ensure they do not contain any unfair or anticompetitive noncompete provisions.

The FTC’s action against Rollins—the parent company of brands including Orkin, HomeTeam, and Critter Control—is the latest in a series of enforcement actions taken by the Trump-Vance FTC to free American workers from labor practices that limit small business formation, employee mobility, and wage and job growth.

Rollins imposed noncompete agreements on nearly all its employees, which typically prohibited them from working in the pest-control industry for two years after ending employment with Rollins. The company’s noncompete agreements prohibited employees from working in pest control within a predetermined distance, typically within a 75-mile radius from one of Rollins’ more than 700 locations in the U.S., the FTC’s complaint alleges.

Under the proposed FTC order, Rollins must, among other obligations, stop enforcing noncompete agreements against thousands of current and former Rollins workers, which will free them from these alleged unfair and anticompetitive agreements.

“Once again, the FTC is fighting for American workers to ensure that they have the freedom to pursue new job opportunities and better pay,” said Daniel Guarnera, Director of the FTC’s Bureau of Competition. “The American economy runs best when workers are not limited by noncompete agreements that distort competition and prevent workers from changing jobs, starting competing businesses, and earning higher wages. The FTC’s actions today build on its work to enforce the antitrust laws to protect American workers.”

Rollins’ noncompete agreements covered a broad range of employees, including pest-control technicians, customer-service representatives, and other employees earning relatively low wages. According to the FTC’s complaint, Rollins imposed these agreements on employees who had no ability to negotiate, received no extra compensation or other incremental consideration for signing the agreement, and were asked to sign these agreements with little or no opportunity to fully consider and understand what they meant.

As alleged in the complaint, Rollins issued hundreds of threatening cease-and-desist letters to former employees, citing an alleged breach of their noncompete agreements. In addition, Rollins has filed multiple lawsuits against former employees challenging an alleged noncompete agreement breach.

The noncompete agreements have denied workers access to job opportunities, restricted worker mobility, and likely resulted in lower wages and salaries, reduced benefits, less favorable working conditions, and personal hardship, the FTC’s complaint alleges. The agreements have also suppressed competition by preventing the entry and expansion of Rollins’ competitors, while also discouraging Rollins employees from starting new businesses that could compete in the pest-control industry, the complaint further alleges.

The FTC’s proposed consent order states, among other things, that:

• Rollins must cease and desist from, directly or indirectly, entering or attempting to enter into, maintaining or attempting to maintain, enforcing or attempting to enforce, or threatening to enforce a noncompete agreement; and
• Rollins must provide notice to current and former employees that they are no longer subject to a noncompete agreement and that they can compete against Rollins, including by starting their own business.

Warning Letters

Chairman Andrew N. Ferguson also issued warning letters to 13 other companies in the pest control industry advising recipients that noncompete agreements deployed elsewhere in the industry may have harms similar to Rollins’ noncompete agreements.

These adverse effects can include restricted worker mobility and access to job opportunities, reduced wages, salaries, and benefits, less favorable working conditions, personal hardships, and impeded entry, expansion, and growth of competitors. The letters urge recipients to conduct a comprehensive review of their employment agreements—including any noncompetes—to ensure they are appropriately tailored and comply with the law.

The FTC has prioritized investigating and prosecuting deceptive, unfair, and anticompetitive labor-market practices, including through the creation of a cross-agency Joint Labor Task Force.

The Trump-Vance FTC has brought several actions to stop anticompetitive labor practices including:

• Ordering the nation’s largest pet cremation business to stop enforcing noncompete agreements against nearly 1,800 workers;
• Stopping building services contractor Adamas Amenity Services LLC (Adamas) and its affiliated businesses from enforcing no-hire agreements; and
• Issuing letters to several large healthcare employers and staffing firms urging them to conduct a comprehensive review of their employment agreements to ensure they are appropriately tailored and comply with the law.

The Commission vote to issue the complaint and accept the proposed consent agreement for public comment was 2-0. Chairman Andrew N. Ferguson issued a statement joined by Commissioner Mark R. Meador. 

The public will have 30 days to submit comments on the proposed consent agreement package. Instructions for filing comments appear on the docket. Once processed, they will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.