Labor & Employment Law Daily Wrap Up, AGENCY NEWS—Pet cremation company agrees to settle FTC charges over noncompete agreements, (Sep 8, 2025)

By Jody Coultas, J.D.

This is the first FTC action related to noncompete agreements since the Noncompete Clause Rule was held to be unconstitutional.

The FTC has issued a proposed consent order barring pet cremation company Gateway Services, Inc. and its subsidiary from enforcing noncompete agreements against their employees. The FTC has also launched a public inquiry to better understand the scope, prevalence, and effects of noncompete agreements.

Gateway is the largest pet cremation business in the U.S. with over 100 locations servicing 17,000 veterinary clinics across North America. In 2019, Gateway required all new employees to agree to a noncompete agreement regardless of their position or responsibilities, according to the FTC’s complaint. The agreements typically require that, for one year following the conclusion of employment with Gateway, the employee is prohibited from working in the pet cremation service industry anywhere in the U.S. The agreements apply even when Gateway no longer operates facilities in near the employee’s location. All Gateway employees, except for those working in the state of California, are subject to noncompete agreements. In total, over 1,780 U.S.-based Gateway employees are currently subject to the agreements.

The FTC alleged that the noncompete agreements are anticompetitive because they alter the bargaining position between employees and Gateway. The agreements likely cause lower wages and salaries, reduced benefits, less favorable working conditions, and, among other things, personal hardship to employees. The agreements are also anticompetitive because they have the likely purpose and effect of suppressing competition by impeding the entry and expansion of Gateway’s competitors in the pet cremation services industry, according to the FTC. Former employees were also unlikely to start competing businesses.

The proposed consent order requires Gateway to immediately stop enforcing all existing noncompete agreements and provide notice to its employees that they are no longer subject to those agreements. Gateway is also barred from entering into future noncompete agreements. Finally, Gateway cannot prohibit employees in any employment agreement from soliciting any prospective, current, or former customers of Gateway, except with respect to those current or prospective customers with whom the employee had direct contact or personally provided service in the last 12 months of their employment with Gateway.

Commissioner statement. Chairman Andrew N. Ferguson and Commissioner Melissa Holyoak said that the FTC will continue to address noncompete agreements under the FTC Act under a case-by-case approach, and noted their continued belief that the FTC’s noncompete rule was unconstitutional and properly struck down by the courts before it was enacted.

Dissent. Commissioner Rebecca Kelly Slaughter voted against the agreement because of the settlement failed to address the structural problems in the underlying market. Because of a lack of competitors, “Gateway is able to exert more control over the options and prices pet owners pay for services in their time of need; and over the employment options, pay, and working conditions available to workers. That underlying market structure is part of what enables Gateway to execute the noncompete strategy described in the Commission’s complaint. But the Commission’s order does nothing to address or unwind it.” Commissioner Slaughter also noted that the FTC should provide “full-throated defenses” of the FTC’s noncompete rule being challenged in several court cases.

Public inquiry. The FTC has also launched a public inquiry to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions. “We are asking the public to help shine a light on unfair and anticompetitive agreements,” said Kelse Moen, Deputy Director of the Bureau of Competition and co-chair of the agency’s Joint Labor Task Force. “Unreasonable noncompete agreements have proliferated for too long in the dark. With the assistance of the employees and workers most burdened by them, the Trump-Vance FTC intends to uproot the worst offenders and restore fairness to the American labor market. We look forward to closely reviewing every response.”

The public will have 60 days to submit comments at Regulations.gov, no later than November 3, 2025.

Companies: Gateway Services; Gateway US Holdings, Inc.

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