The Federal Trade Commission (FTC) has issued noncompete warning letters to healthcare employers and staffing companies across the country, signaling a new wave of federal scrutiny over restrictive employment practices—particularly in the healthcare industry. This development comes just as Texas SB 1318 is set to overhaul the rules for physician and healthcare provider noncompetes on September 1, 2025.
Healthcare employers—especially dental practices, group medical clinics, and staffing firms—should immediately review and update their noncompete agreements, or risk facing FTC action under Section 5 of the FTC Act.
What’s in the FTC’s Letter?
In a strongly worded letter from Chairman Andrew Ferguson, the FTC warned that:
- Many noncompetes in healthcare may be illegal—particularly if they are overbroad in scope, duration, or geography, or if they apply to roles where a noncompete is not necessary.
- These clauses can be especially harmful in rural areas, where restricting a provider’s mobility could impact patient care.
- The FTC intends to pursue enforcement actions under its authority to investigate “unfair methods of competition.”
- Employers using problematic noncompetes are encouraged to discontinue them immediately and notify affected employees.
📄 View the full FTC warning letter (PDF)
How This Interacts With Texas Law
Just weeks ago, Texas SB 1318 took effect. This new law already narrows the enforceability of noncompetes for:
- Physicians, dentists, nurses, and physician assistants
- With new limits of 1 year duration and a 5-mile geographic scope
- And requiring a buyout option capped at the provider’s annual salary
Federal and state scrutiny are now converging, creating real risk for employers who rely on outdated or overly aggressive noncompete templates.
Next Steps for Employers
Texas healthcare practices should:
✅ Audit all employment agreements for existing noncompetes
✅ Revise templates to comply with both SB 1318 and FTC guidance
✅ Consider alternatives like:
- Non-solicitation clauses
- NDAs and confidentiality protections
- Retention bonuses and training repayment provisions
This is especially urgent if you plan to onboard or renew agreements with providers after September 1, 2025.
Stay Compliant—And Competitive
If you’re unsure whether your contracts comply with these fast-moving legal changes, now is the time to act. At Palter Law, we’re helping healthcare providers, dentists, and small business owners navigate the evolving noncompete landscape while protecting what matters—your patients, your staff, and your business.
📞 Contact Nathanial L. Martinez
Nathanial is a Dallas-based commercial and employment attorney who advises healthcare and dental practices across Texas. He regularly assists with noncompete design, contract disputes, and regulatory compliance in both state and federal court.
📧 nmartinez@palterlaw.com | 📞 214-888-3114
📍 Serving clients statewide and beyond