FTC Chairman Ferguson Issues Noncompete Warning Letter to Mortgage Connect

Federal Trade Commission Chairman Andrew N. Ferguson sent a warning letter to national mortgage services provider Mortgage Connect urging the company to conduct a comprehensive review of its employment contracts-including any noncompete agreements or other restrictive covenants-to ensure they are appropriately tailored and comply with the law.

The letter responds to material made public in an ongoing lawsuit where Mortgage Connect seeks to enforce a noncompete agreement against a former worker and the competitor who hired her. Information in the lawsuit appears to show that Mortgage Connect may have used unjustifiable noncompete agreements in employment contracts, with potential adverse effects on workers and competition, the Chairman's letter states.

The letter encourages Mortgage Connect to review and discontinue the use of any noncompete or other agreements that are not reasonably necessary and to notify relevant workers of their discontinuance.

The Chairman's letter is the latest action demonstrating the FTC's commitment to actively investigate potentially anticompetitive noncompete agreements and bring enforcement actions to restore competition.

In February, the FTC launched a Joint Labor Task Force that will prioritize rooting out and prosecuting deceptive, unfair and anticompetitive labor-market practices that harm American workers. The FTC also recently ordered Rollins Inc.-one of the largest pest-control companies in the United States-to stop enforcing noncompete agreements against more than 18,000 employees nationwide.