The FTC Just Freed 18,000 Pest-Control Workers From Noncompetes — Is Your Contract Next?

Rollins Inc., the pest-control giant behind Orkin and Critter Control, spent years locking technicians and customer service reps into noncompete agreements that barred them from taking another pest-control job for two years within 75 miles of a company location — often with no extra pay and no real chance to negotiate. In April 2026, the Federal Trade Commission ordered Rollins to tear those contracts up for more than 18,000 employees. In June, the agency finalized the order.

Then it sent warning letters to 13 other pest-control companies, telling them to review their own agreements before they became the next target.

If you run a small business anywhere near the industries the FTC has singled out — pest control, healthcare, staffing, or mortgage services — this isn't background noise. It's a preview of what could land in your inbox.

The federal noncompete ban is dead. The scrutiny isn't.

Small business owners could be forgiven for thinking noncompete agreements are settled law. The FTC's sweeping 2024 rule that would have banned nearly all noncompetes nationwide got struck down in court, and the agency formally rescinded it. Case closed, right?

Not quite. FTC Chairman Andrew Ferguson has been explicit that the agency is trading a broad ban for something narrower but more aggressive: case-by-case enforcement under Section 5 of the FTC Act, which prohibits unfair methods of competition. Instead of one rule for every employer in the country, the FTC is now picking industries, building a case against one visible company, and sending warning letters to everyone else in that space.

Pest control is the clearest example so far. But it isn't the only one. In late 2025, Ferguson sent letters to large healthcare employers and staffing firms warning that noncompetes restricting nurses and physicians limit both worker mobility and patient choice. In May 2026, the agency sent a warning letter to mortgage-services firm Mortgage Connect over similar concerns.

What made Rollins a target

According to the FTC, Rollins imposed noncompetes on a broad swath of its workforce — not just executives or salespeople with access to trade secrets, but technicians and customer service employees. The agreements weren't accompanied by additional compensation or a meaningful opportunity to negotiate. When former employees took jobs elsewhere in the industry, Rollins allegedly responded with cease-and-desist letters and lawsuits.

That combination — broad application, low-wage workers, aggressive enforcement against departing employees — is the fact pattern the FTC keeps returning to. If your business fits that description, the agency has told you, in writing, that it's watching.

What this means if you use noncompetes

You don't need to be a Fortune 500 company to get a warning letter. The FTC sent its pest-control warnings to companies of all sizes in the industry, and its healthcare and staffing letters have gone to firms well outside the household-name category. The agency's theory is straightforward: if your noncompetes look like Rollins's — applied broadly, to lower-wage or hourly workers, without added pay or real negotiation — you're a candidate for the next letter.

A few questions worth answering this month:

• Do your noncompetes apply to hourly or entry-level employees, not just managers and specialists with genuine access to sensitive information?
• Do departing employees get any compensation or consideration specifically tied to the noncompete, or is it a blanket condition of employment?
• How aggressively does your business enforce these agreements against former employees who take jobs with competitors?
• Would a narrower non-solicitation or confidentiality agreement accomplish the same goal without the same exposure?

State law hasn't gone away either

Even setting the FTC aside, several states have their own noncompete restrictions tied to income thresholds, and those numbers move every year. Colorado's 2026 threshold sits at $130,014 in annual compensation — below that, a noncompete generally isn't enforceable at all, and customer non-solicitation clauses carry a lower bar of $78,008.40. Washington's 2026 threshold is $126,858.83 for employees and $317,147.09 for independent contractors, adjusted annually for inflation.

That means a noncompete you wrote five years ago for a $70,000-a-year manager may already be unenforceable in Colorado or Washington, regardless of what's happening in Washington, D.C. If your business operates in multiple states, it's worth checking each one's current threshold rather than assuming a single template covers you everywhere.

Practical steps for the next few weeks

Start by pulling every noncompete currently in your employee files and sorting them by role and pay level. Agreements applied to hourly workers or anyone earning well under six figures are the ones drawing FTC attention right now, and they're also the ones most likely to run afoul of state salary thresholds. For those, consider whether a non-solicitation or confidentiality agreement would protect the same business interest — customer relationships, trade secrets — without the broad restriction on where someone can work next.

If your business is structured as an LLC or you're still finalizing your entity type, this is also a good moment to revisit how your LLC formation paperwork and entity structure handle employment agreements generally — a conversation with an employment attorney alongside your formation documents can catch problems before they become warning letters. And if you're bringing on contractors instead of employees to sidestep the noncompete question entirely, make sure you're getting the contractor classification right, since misclassification carries its own set of federal and state risks.

The FTC's message to small business owners is less about a single rule and more about a pattern: broad, low-wage noncompetes with aggressive enforcement are now a target, one industry at a time. Getting ahead of that with a plain review of your existing agreements costs a lot less than responding to a warning letter after the fact.

Photo by Redd Francisco on Unsplash