FTC orders Rollins to scrap non-compete clauses for workers

The Commission alleged that Rollins’ non-compete practices violated Section 5 of the FTC Act. Rollins did not admit wrongdoing. The consent agreement states that the company’s participation is for settlement purposes only and does not constitute an admission that the law was violated or that the FTC’s factual allegations are true. 

The practical demands on Rollins’ HR operations are significant. Within 60 days of the order’s issuance, the company must deliver a notification letter and a copy of the order to each Covered Employee currently subject to a non-compete agreement. Delivery must be made by name, either by US Mail with return receipt requested or via electronic transmittal with proof of a read-receipt or delivery. Within 30 days, Rollins must also begin posting a notice in the documentation provided to each new Covered Employee upon hire, informing them that their employment will not be subject to a non-compete and that they are free to work for competitors, start competing businesses, or solicit Rollins customers through general advertisements after leaving the company. 

The notification obligations do not stop at rank-and-file workers. Within 30 days, every director, officer, HR officer, and the most senior HR employee overseeing hiring at each US location must receive a copy of the order and the FTC’s complaint. Each must then submit a written statement within 30 days confirming they have read the order and understand that non-compliance may subject the company to penalties. 

Rollins must also file verified compliance reports on a prescribed schedule: interim reports at 60 days and six months, then annual reports beginning one year after issuance and continuing annually for the next nine years. Those annual filings require a sworn declaration that non-compete agreements with Covered Employees have been rescinded and not reimposed, and that the company’s agreements comply with the order. Rollins must also disclose any cease-and-desist letters or similar threats of legal action, and any court filings, against Covered Employees related to non-solicitation agreements – a requirement that keeps the FTC’s eye on how Rollins uses its remaining post-employment restrictions. 

Rollins does retain some tools. The order permits the company to continue enforcing agreements that protect confidential business information and trade secrets, and non-solicitation provisions, to the extent those agreements are permitted by law and the consent order. Non-competes tied to business acquisitions are also allowed, so long as the individuals involved hold a preexisting equity interest in the business being acquired.