The Federal Trade Commission (FTC) has taken enforcement action against Gateway Services, Inc. and its subsidiary Gateway US Holdings, Inc., requiring them to cease the use of noncompete agreements for their employees. The FTC alleges that these agreements restricted nearly all Gateway employees from working in the pet cremation industry anywhere in the United States for one year after leaving the company.
A proposed consent order by the FTC mandates that Gateway immediately stop enforcing existing noncompete clauses. This action will release about 1,800 workers from restrictions on job mobility and negotiations for improved wages and benefits.
“The Commission will stand up for workers and ensure that they receive all the benefits that flow from robust competition between employers,” said Daniel Guarnera, Director of the FTC’s Bureau of Competition. “The antitrust laws protect workers from noncompete agreements that harm competition, including by preventing workers from switching to better-paying jobs or starting their own businesses. We will protect workers by enforcing the laws against anticompetitive noncompetes.”
The agency noted a broader effort under what it calls the Trump-Vance FTC to target deceptive, unfair, and anticompetitive labor-market practices. These efforts include a Joint Labor Task Force focused on such issues.
“Under the leadership of Chairman Ferguson, the FTC is working hard every day to marshal resources across the agency to uproot unfair and unreasonable employment agreements that drive down wages and reduce job mobility,” said Kelse Moen, Deputy Director of the Bureau of Competition and co-chair of the Joint Labor Task Force. “The Trump-Vance FTC will never stop fighting for American workers. Rest assured: today’s action will not be the last.”
Gateway is recognized as the largest pet cremation business in America, with over 100 locations serving 17,000 veterinary clinics throughout North America. The company implemented its noncompete policy in 2019 for all new hires regardless of position or responsibilities. According to the complaint, these policies affected everyone from executives to hourly facility staff.
The FTC contends that Gateway’s noncompete requirements are anticompetitive because they disrupt fair bargaining between employees and employer and may hinder new competitors entering or expanding within the pet cremation market.
As outlined in its proposed consent order, Gateway must not enter into or enforce most types of noncompete agreements moving forward. They are also required to notify current and former employees that they are no longer bound by such terms. In addition, Gateway cannot broadly prohibit employees from soliciting customers except under limited circumstances involving recent direct contact during employment.
The Commission voted 3-1 to issue both its complaint and accept a proposed agreement pending public comment; Commissioner Rebecca Kelly Slaughter dissented while Chairman Andrew N. Ferguson issued a statement joined by Commissioner Melissa Holyoak.
Public comments on this agreement can be submitted within 30 days via Regulations.gov.
According to standard procedure, an administrative complaint is issued when there is reason to believe legal violations have occurred or are ongoing and it appears further proceedings serve public interest. A finalized consent order holds legal force regarding future actions by those named in it.
The FTC states its mission is to promote competition while protecting consumers through education and enforcement activities.
