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If you’ve followed the U.S. Federal Trade Commission’s (FTC’s) non-compete saga over the past few years, you’d be forgiven for losing the thread. Pest Management Professional has covered the story as it unfolded, including recent enforcement actions against major industry players. With the dust settling, here’s a clear look at where things stand for owners running their businesses and those thinking about a sale.
The FTC’s sweeping nationwide ban on non-compete agreements never took effect. A federal court in Texas struck it down in Ryan LLC v. FTC in August 2024. The FTC dropped its appeal in September 2025 and, on Feb. 12, 2026, the rule was removed from federal regulations.
That doesn’t mean non-compete agreements are a free-for-all. The FTC has shifted to case-by-case enforcement, focusing on what it views as overly broad non-compete agreements, especially for rank-and-file workers. The bigger story is at the state level, where a growing number of states — including California, Oklahoma, North Dakota and Minnesota — restrict or prohibit employment non-compete agreements, while others like Washington have tightened their rules.
But while the federal threat is gone, the legal landscape is still evolving. Non-compete agreements for technicians, route managers and office staff generally are governed by the law of the state where each employee works, and what was enforceable a few years ago may not be today.
Broad non-compete agreements that bar former employees from working anywhere in the industry, across large areas and long timeframes, are increasingly hard to enforce. Narrower tools tend to hold up better and accomplish most of what owners actually need: non-solicitation agreements to protect customer relationships, confidentiality covenants for proprietary information, and well-drafted trade secret protections.
What sellers should know
For owners considering a sale, there’s an important distinction. Even at its strongest, the proposed federal ban carved out non-compete agreements tied to the sale of a business. Most states recognize that buyers can require sellers not to compete, since they are paying for goodwill — the customer relationships, recurring revenue and reputation. Sale-related non-compete agreements remain widely enforceable.
The catch is that this protection applies to those who actually sell ownership. It does not automatically extend to employees. Consider a common scenario: Jen, a second-generation owner, is selling her company. While her two adult children manage operations, they hold no equity. The buyer wants all three individuals under non-compete agreements. While Jen’s non-compete agreement is on solid ground, her children’s are not. Without an ownership stake to sell, their agreements have to stand as ordinary employment non-compete agreements, which are exactly the type facing increased scrutiny. The same goes for key managers, top technicians and sales leads a buyer wants to retain.
What all owners should know
If a sale may be in even your distant future, plan ahead. Review existing agreements and clean up overly broad non-compete agreements before they become a diligence issue. For key non-owner employees, alternatives like targeted non-solicitation agreements, confidentiality agreements and stay bonuses often achieve the same goal with less risk.
You also may consider granting equity to key family members or executives well in advance of a sale. It allows them to share in the proceeds when the company sells. Plus, because they become actual sellers by transferring an ownership interest, their non-compete agreements are far more likely to fall under the same sale-of-business protection as yours. That can make a real difference for buyers who want assurance that the people running the day-to-day operations won’t walk across the street and compete.
Return to our non-compete strategy hub:
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