The Federal Trade Commission (FTC) announced on September 4, 2025, that it had filed a complaint against one of the largest pet cremation businesses in the U.S., alleging that the company’s widespread use of noncompete agreements violates federal law. The case against Gateway Services is one of the most significant examples in recent history of the FTC targeting an employer’s use of post-employment restrictions as an "unfair method of competition." Notably absent were allegations that the conduct also violated the Sherman Antitrust Act. The FTC also filed a consent decree settling the case.   

Simultaneously, the agency launched a public inquiry to gather information about employer noncompete agreements, with a submission deadline of November 3, 2025. Current and former employees under noncompete agreements as well as employers facing hiring difficulties due to a rival’s noncompetes are encouraged to share information with the FTC.

Together, the complaint and public inquiry highlight the FTC’s dual strategy: challenging individual employers it views as overreaching while also building a broader record on how noncompetes affect workers and markets. Employers can expect noncompete provisions to remain a subject of scrutiny at the federal level going forward — following on the heels of the FTC’s launch of a Joint Labor Task Force in February. Importantly, the actions raise antitrust considerations for businesses regarding practices that unfairly curb worker mobility and bargaining power and can adversely impact competition in the employer’s industry. Indeed, the FTC’s press release indicates that the agency is "marshal[ling] resources…to uproot unfair and unreasonable employment agreements."  

Background of FTC Complaint and Consent Order

Gateway is the largest pet cremation services company in North America, employing nearly 2,000 U.S. workers across more than 100 facilities. Since 2019, Gateway has required nearly all new hires — ranging from senior executives to hourly operations staff — to sign noncompete agreements that prohibit them from working in the pet cremation industry anywhere in the U.S. for one year after leaving the company.

The FTC alleges that Gateway’s practices harmed employees and competitors alike in two separate industries (labor and pet cremation services) by:

• Restricting employee mobility: Noncompetes applied regardless of role, lowering workers’ bargaining power and leading to reduced wages, benefits, and job opportunities.
   
• Suppressing competition: The agreements allegedly prevented former employees from joining competitors or starting new businesses, thereby limiting entry and expansion in local markets.

The FTC also alleged that Gateway recognized the noncompete agreements for employees reduced the competitive pressures Gateway faced for pet cremation services — it "[s]trongly preferred" noncompete agreements for potential employees it might acquire in competitive markets while considering the agreements "nice to have" for acquisition targets in markets where it faced less competition.

The consent decree prohibits Gateway from entering into, maintaining, or enforcing noncompete agreements, with limited exceptions, and ensures that Gateway allows employees entering into employment agreements to solicit any prospective, current, or former customers of Gateway, except those with which the employee has had direct contact in the last 12 months of their employment.  

Background of FTC Request for Information

In tandem with the Gateway complaint, the FTC also turned to fact-finding, launching a public inquiry to better understand how noncompetes are affecting workers and competition nationwide. The agency invited employees, employers, labor organizations, and other stakeholders to submit comments by November 3, 2025. In particular, the FTC asked for details on:

• The names of employers using noncompetes and their stated reasons for doing so.
   
• The roles, functions, and typical salary ranges tied to the agreements.
   
• The terms and geographic scope of the restrictions.
   
• Whether, and how, employers enforce the terms.
   
• Examples of employee harms, impacts on entrepreneurship or innovation, competition barriers, and health care sector-specific effects.

The FTC’s request for information underscores that the agency is maintaining its aggressive enforcement posture as it relates to noncompete provisions, even while it may have recently given up litigating its previously proposed rule that would have been a total ban. On September 5, the FTC took steps to dismiss its appeals of lower court orders finding the FTC’s noncompete rule unlawful. You can read our prior client alerts relating to that rule here. Instead, the FTC appears to be shifting toward a fact-driven, enforcement-first approach, and the agency is using public input to identify where restrictions cross the line to build a record for future individualized action.

Why This Matters for Companies 

The complaint reflects themes employers have seen in recent years:

• Overbreadth is risky: Courts and regulators are increasingly hostile to restrictions untethered from specific roles, geographic areas, or legitimate business interests.
   
• Less restrictive alternatives are available: Confidentiality or non-solicitation agreements may achieve business goals without the same legal risks.
   
• Regulatory scrutiny is growing: The agency is using its enforcement powers to pursue individual companies it views as overreaching.

Practical Takeaways for Employers

• Review your use of noncompetes — particularly for hourly or non-exempt workers — and assess whether less restrictive agreements would suffice.
   
• Tailor restrictions in time, geography, and scope to the employee’s actual role and access to sensitive information.
   
• Stay alert to FTC enforcement actions as well as evolving state laws, which continue to move in differing directions on noncompetes.

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