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The Employer Handbook Blog
The FTC Continues Cracking Down on No-Hire Agreements
No-hire agreements have quietly lived in vendor and service contracts for years.
The FTC has now made clear that they are an active antitrust enforcement target.
TL;DR: The Federal Trade Commission entered a consent order prohibiting a company from using no-hire agreements in customer contracts. The FTC treated those provisions as unlawful restraints on competition for labor and required immediate cessation, affirmative notice to employees and customers, and long-term compliance obligations. Employers should review vendor and service agreements for no-hire language before the FTC does it for them.
What the FTC Challenged
According to the FTC’s complaint, the company routinely included no-hire provisions in customer service agreements that:
• prohibited customers from hiring the company’s employees
• prevented replacement vendors from hiring those employees
• imposed financial penalties if those restrictions were violated
• applied during the contract and for a period after it ended
The FTC alleged that these agreements harmed competition in multiple ways, including restricting worker mobility, suppressing wage negotiation, discouraging customers from switching vendors, and deterring competitors from bidding or expanding.
Critically, the FTC framed the conduct as a restraint on competition for labor, not as an employment-policy dispute.
The FTC also emphasized in its announcement that enforcement against labor-market restraints like no-hire agreements remains an active priority, not a one-off action.
The Remedy Is the Signal
The consent order does not merely prohibit future use of no-hire agreements.
It requires the company to:
• immediately stop enforcing all existing no-hire agreements
• treat current no-hire provisions as null and void
• notify customers from the past three years that the restrictions are unenforceable
• notify employees that they may seek jobs with building owners or replacement vendors
• post workplace notices confirming that no-hire agreements do not apply
• comply with training, monitoring, and reporting requirements for up to ten years
That scope matters. The FTC is not just policing contract language. It is unwinding past conduct.
What Employers Should Take Away From This
This enforcement action carries several practical lessons for employers.
First, this is not just an HR issue. The agreements at issue appeared in customer and vendor contracts, meaning procurement, operations, and facilities teams can create antitrust risk without realizing it.
Second, “we don’t enforce it” is not a defense. The FTC’s theory makes clear that dormant no-hire language can still create exposure, especially when invoked during a vendor transition.
Third, no-hire clauses are being treated as labor-market restraints, not restrictive covenants. The focus is competition for workers, not whether an employee signed anything.
Fourth, unwinding prior agreements can be more disruptive than stopping future ones. Notice requirements to customers and employees can create operational and relationship challenges.
Finally, industry labels do not matter. Although this case involved building services, the enforcement theory applies broadly wherever companies agree to limit hiring across organizational lines.
Not a Noncompete Case – and That Matters
This enforcement action did not involve employee noncompete agreements. It focused on agreements between businesses that limited competition for workers.
Employers do not need employee signatures or HR-authored restrictive covenants to create antitrust exposure. Vendor and service agreements negotiated outside HR can raise the same risks.
Bottom Line
No-hire provisions are no longer a background concern or a theoretical enforcement risk.
The FTC has made clear that it views these agreements as unlawful restraints on labor markets and is willing to impose public, long-term remedies to stop them.
If your company’s vendor or service agreements restrict who can hire whom, this is the moment to take a closer look.