The recent shifts in laws surrounding non-compete agreements have created confusion for both employers and employees. If enacted, the non-compete ban proposed by the Federal Trade Commission (FTC) will redefine how businesses, particularly in healthcare and other skilled professions, manage their workforce and protect their competitive edge. 

So, what does this mean for you?

Whether you’re a healthcare professional or running a medical practice, understanding the rationale behind the non-compete ban and its potential impacts is valuable.

What Is the Non-Compete Ban?

On April 23, 2024, the FTC issued a final rule to ban most non-compete clauses in employment agreements, as they limit worker mobility, suppress wages, and stifle innovation.

Non-compete agreements prevent employees from joining or starting a competing business within a specific geographical area and timeframe after leaving an employer. The primary goal of a non-compete clause is to safeguard sensitive client information, such as unique treatment methods or valuable business strategies, that competitors could use if an employee were to leave.

The FTC’s proposed rule seeks to ban existing and future non-compete agreements across most employees, except senior executives. So, while the ban nullifies nearly all non-compete agreements, senior executives in “policy-making positions” with annual earnings exceeding $151,164 will be exempt from the current non-compete contracts. Nevertheless, they would be exempt from any future non-competes.

The FTC’s non-compete ban was set to take effect on September 4, 2024. However, on August 20, 2024, the U.S. District Court for the Northern District of Texas blocked the rule, preventing it from taking effect or being enforced. The FTC subsequently dismissed its appeal on September 5, 2025.

How Will It Impact Employees?

Non-compete agreements bind employees in a contract that often prevents them from exploring new job opportunities or starting their own business within a certain period and geographic area after leaving their employer. The American Medical Association reports that non-compete clauses affect 37% to 45% of physicians. Non-competes can restrict doctors from practicing within a set radius if they decide to leave a practice or hospital, impacting their professional growth and limiting access to care for patients in their communities. As a result, physicians may feel pressured to stay with their current employer, limiting their career options.

The potential FTC ban on non-compete agreements is likely to impact physicians positively in the following ways:

• Greater Career Mobility: Physicians would have more flexibility to explore new roles without being restricted by geographic or time-based limitations. If a doctor wants to move to a different practice, work in a nearby hospital, or even open a private practice, they’d be able to do so without legal restrictions holding them back.
• Better Work-Life Balance: Without non-competes, physicians can find work closer to home or in areas that better fit their personal and family needs. Moreover, doctors can effectively balance their personal and professional lives, reducing burnout.
• Increased Job Satisfaction: With the leverage to negotiate fair compensation, better terms, benefits, and work environments with their employer, physicians can experience better job satisfaction.
• Improved Patient Access: A ban on non-competes would enable physicians to work for multiple hospitals or clinics, improving access to specialized care within a community. This flexibility would allow specialists to serve a broader range of patients across different facilities, helping address gaps in coverage and reducing health inequities, particularly in underserved areas. 
• Room for Innovation: Physicians interested in developing new treatment models, healthcare startups, or other innovations would have fewer legal barriers, making it easier to put new ideas to work. This freedom can foster innovation in healthcare delivery, benefiting physicians and patients by improving access, efficiency, and quality of care.

The non-compete ban certainly brings good news for physicians, freeing them from restrictive contract clauses that can limit their career choices. But, as with any crucial change, there’s another side to consider. Let's discuss the impact of the non-compete ban on healthcare employers and medical practices.

How Will It Impact Employers?

The non-compete ban could have adverse implications for medical practices and healthcare facilities. Without the protection of non-competes, practices may face unfair competition from opportunistic employees or rival facilities eager to recruit their doctors and leverage their patient relationships.

Here's how the non-compete ban will negatively impact medical practices:

• Increased Employee Turnover: The ban on non-compete clauses could lead to higher employee turnover, with physicians being free to pursue roles with better pay, benefits, or work-life balance. Opening an independent practice will also become straightforward, prompting some physicians to start a private practice. This relaxation would increase recruitment and training costs for healthcare facilities as they work to fill gaps left by departing staff. 
• Revenue Loss: Practices invest significant time and resources in training, mentorship, and continuing education for their physicians. However, a ban on non-competes introduces the risk that doctors could leave soon after gaining valuable training and experience, causing a substantial loss of expertise and financial investment. Practices may lose highly trained staff to competitors, potentially impacting the quality of care and leading to financial setbacks as they reinvest in recruiting and training new physicians.
• Increased Competition and Potential Loss of Patients: If a physician leaves a practice, especially in a small community, they may take a portion of their patient base with them, which can impact the practice’s revenue and patient loyalty. Practices may need to work harder to retain patients and providers, requiring improved strategies and marketing efforts.
• Higher Costs for Talent Retention: Non-competes provide physicians more freedom to explore new job opportunities, but increase the risk of employee attrition. To compete, healthcare employers may need to offer more attractive salaries, enhanced benefits, and additional perks, which can drive up operational costs. This financial strain can be challenging, especially for smaller or independent practices, where resources are often limited. 
• Disruptions to Patient Care: Continuity of care is vital for patients, especially those with chronic conditions. High physician turnover can disrupt patient relationships and care plans. Healthcare leaders may need to implement systems to ensure seamless patient care, even if a physician leaves.

What Does the Future Hold?

The FTC’s nationwide non-compete ban is effectively off the table. A federal court permanently blocked the rule in August 2024, and the agency dropped its appeal in September 2025 under the Trump administration. With no revival or Supreme Court challenge expected, oversight now shifts entirely to state laws and targeted FTC action in truly egregious cases.

That means non-compete agreements will continue to be governed by a patchwork of state rules. Four states—California, Minnesota, North Dakota, and Oklahoma—maintain full bans, while 34 states and Washington, D.C., allow non-competes but impose limits such as income thresholds and role-based restrictions. Healthcare faces even tighter scrutiny. New 2025 laws in states like Louisiana, Maryland, and Pennsylvania further limit non-competes for practitioners, building on earlier reforms in states such as Colorado, Indiana, Tennessee, and Texas to enhance workforce mobility and access to care.

For healthcare employers, the message is clear: now is the time to review and audit contracts for state-specific compliance. Broad, one-size-fits-all restrictions are increasingly risky. Instead, focus on narrow, reasonable terms that protect legitimate business interests. It’s also wise to consult legal experts on jurisdiction-specific rules, especially for roles like CDI, coding, or critical care, where mobility reforms are gaining traction. In this state-driven landscape, the goal is balance: protecting the organization while still supporting professional growth and workforce flexibility.