Illegal non-compete agreements have been nullified for more than 18,000 pest control technicians, customer service representatives and other employees and former employees of Rollins Inc.. A United State Federal Trade Commission (FTC) order to the publicly traded pest control company received final approval earlier this week, directing it to cease tactics to constrain employee movement and undermine competition in the U.S. market.
Rollins is parent to 21 different brands offering pest control and wildlife management services for the commercial and residential sectors. That includes three entities based outside the United States — Orkin Canada, Orkin Australia and Orkin United Kingdom — where the FTC order does not apply.
Within the U.S., Rollins has been directed to give formal notice to all affected employees and former employees that they are free to seek employment with a competing company or start their own pest control businesses. The ruling was issued after an FTC investigation found that new hires to Rollins and employees of acquired companies were pressed to sign non-compete agreements as a condition of employment.
“That sort of indiscriminate ‘general policy’ approach of requiring every single worker to sign a non-compete agreement irrespective of the worker’s position or responsibilities cries out for scrutiny under the antitrust laws,” FTC Chair Andrew Ferguson and Commissioner Mark Meador asserted in a joint statement when they first issued the order to Rollins earlier this spring.
Signatories to the agreements were prohibited from working for any pest control company located within a 75-mile radius of a Rollins business for a two-year period after leaving Rollins’ employ. The FTC also collected evidence that Rollins had issued hundreds of threatening cease-and-desist letters to former employees and, in some cases, filed lawsuits contending they had breached the non-compete agreements.
“The targets of this enforcement campaign often lacked the resources to litigate and acceded to the threat at great personal and professional expense,” Ferguson and Meador noted. “The agreements imposed additional anti-competitive effects, including impeding the expansion of existing competitors and delaying entry of new small-business competitors who could challenge Rollins.”
Under the FTC order, Rollins can legitimately continue to impose non-compete agreements on directors, officers and senior company executives who hold policy-making authority and have employment benefits that entitle them to share in company profits or equity.
