States, FTC Take on Noncompetes

In noncompete news, the Federal Trade Commission (FTC) took action against major pest control companies, while two additional states—Virginia and Washington—enacted legislation restricting the use of noncompete agreements.

Under a proposed order with the FTC, Rollins, Inc. (the parent company of brands such as Orkin, HomeTeam and Critter Control) must stop enforcing noncompete agreements against more than 18,000 employees nationwide.

The company imposed noncompete agreements on nearly all of its employees, the agency said, including pest-control technicians, customer service representatives and other employees earning relatively low wages. The agreements typically prohibited employees from working in pest control within a 75-mile radius from one of Rollins’ more than 700 U.S. locations for a two-year period.

According to the FTC, Rollins imposed the agreements on employees who had no ability to negotiate, received no extra compensation or other incremental consideration for signing the agreement and were asked to sign the agreements with little to no opportunity to fully consider and understand what they meant.

Rollins also enforced its agreements, sending hundreds of cease-and-desist letters, as well as filing suit against former employees, the agency said.

In addition to ceasing and desisting from entering into, maintaining or enforcing noncompete agreements, Rollins must provide notice to current and former employees that they are no longer subject to a noncompete agreement and that they can compete against Rollins, including by starting their own business.

The to 13 other companies in the pest control industry, urging them to review their agreements to ensure compliance with applicable law and encouraging recipients to discontinue the use of any noncompetes that are not reasonably necessary to achieve procompetitive aims.

On the state level, Virginia joined the growing number of states banning noncompete agreements with a new law that takes effect July 1, 2026.

Prior law prohibited enforcement of noncompetes against: employees whose average weekly earnings fell below the state’s average weekly wage, certain employees (such as interns) whose hourly rate was less than Virginia’s median hourly wage for all occupations for the preceding year, and nonexempt employees.

Senate Bill 170 added a new category: employees who were discharged without cause, unless the employer provides the employee a severance benefit or other monetary payment. The severance benefit or other monetary payments must be disclosed at the time the noncompete agreement is entered into.

The new law only applies prospectively but allows employees to bring a civil action against an employer who attempts to enforce a prohibited noncompete, with the potential for costs, attorneys’ fees and expert witness fees as recovery. Civil penalties of $10,000 per violation are also on the line for employers.

In Washington state, the legislature expanded an existing law restricting noncompetes by invalidating nearly all noncompete agreements, regardless of their income threshold, beginning June 30, 2027. Importantly, the prohibition is retroactive and applies to noncompetes entered into before the law was enacted.

House Bill 1155 in Washington contains just one exception: noncompete agreements will be permitted in connection with the sale or purchase of a business for individuals purchasing or disposing of an ownership interest of at least one percent of the business.

The law also forbids an employer who “threatens, demands, requires, or otherwise effectuates that an individual return, repay, or forfeit any right, benefit, or compensation, as a consequence of the individual engaging in a lawful profession, trade, or business of any kind.”

HB 1155 does permit training repayment agreement provisions that meet four requirements, however: if the repayment only covers actual out-of-pocket educational expenses; lasts no longer than 18 months after the employee’s start date; is pro-rated based on the remainder of the 18-month period; and the obligation to repay is forgiven if the employee leaves for “good cause.”

Narrowly drafted non-solicitation agreements, confidentiality agreements and covenants not to use or disclose trade secrets are still allowed.

The Washington law requires employers to make “reasonable efforts” to provide written notice by Oct. 1, 2027 to current and former employees, as well as independent contractors with active noncompete agreements that their noncompete covenants are void and unenforceable.

To read the proposed FTC order, click .

To read Virginia’s new law, click .

To read Washington’s new law, click .

Why it matters: Noncompete agreements continue to be a hot topic for legislation and enforcement activity, with the FTC’s latest actions focused on the pest control industry and , including California, Minnesota, North Dakota and Oklahoma, with other jurisdictions—New York, Ohio, Texas and Wyoming—also considering restrictions.