Last Updated September 26, 2025
While the primary function of a staffing company is to connect clients with qualified candidates, running a successful agency also means dealing with complex issues like non-compete agreements.
Below, we’ll explore the ins and outs of staffing agency non-compete agreements, including how they work, their legal ramifications, and what to consider before implementing them as part of your hiring practices.
Key Takeaways
- Staffing agency non-compete agreements are legally binding contracts that restrict candidates or recruiters from working with competitors for a set time and within certain locations.
- The FTC’s 2024 ruling to ban non-competes created legal uncertainty, with states like California, Oklahoma, North Dakota, and Minnesota already banning them outright.
- Non-competes help staffing agencies protect client relationships, candidate pipelines, and proprietary information, but they can also discourage top talent and spark legal challenges.
- Agencies should verify compliance, review state laws, and maintain transparent communication with employees to ensure non-compete agreements are used responsibly.
What Is a Staffing Agency Non-Compete Agreement?
A staffing agency non-compete agreement describes a legally binding contract that candidates may be required to sign, which would prohibit them from working with another agency.
Non-compete agreements help protect the interests of a particular business and its shareholders, especially within the staffing industry. While non-compete agreements are standard practice at many staffing agencies, the individual terms within the agreement often correspond to specific client concerns.
By contrast, a staffing agency non-disclosure agreement (NDA) prohibits only information sharing. Candidates may be subject to a staffing NDA, a non-compete agreement, and a staffing agency non-solicitation agreement as part of a comprehensive approach to protect a company’s interests. Implementing a non-solicitation clause in staffing agreements ensures former employees cannot solicit clients after leaving.
How Do Staffing Non-Competes Work?
By signing a non-compete agreement, a candidate agrees to certain restrictions regarding working for a competitor within the same industry. Most non-compete agreements describe how long former employees are bound by these restrictions—anywhere from six months to two years or more—and the consequences of violating these terms.
Many successful staffing agencies might also implement a recruiter non-compete agreement to protect its client relationships and candidate pipelines. A well-drafted non-compete agreement in recruiting ensures that recruiters can’t take clients or candidates to a competitor after leaving the agency.
By incorporating a non-compete clause in recruitment contracts, agencies can help safeguard their own business interests.
Understanding the FTC’s 2024 Ruling on Non-Competes
In July of 2021, President Biden issued an Executive Order urging the Federal Trade Commission’s Chair to address non-compete agreements. In May 2024, the Federal Trade Commission (FTC) finalized its ruling to ban all non-compete agreements, which was set to go into effect later that year. However, multiple courts have tried to appeal the FTC’s ruling, and the issue was still being debated in mid-2025.
Staffing Non-Compete Considerations
Non-compete agreements best serve staffing agencies at various touchpoints across their talent pipelines when integrated into a comprehensive approach that complies with any applicable state laws. In addition to weighing the advantages and disadvantages of non-compete agreements, staffing agencies should also determine how to maintain transparent communication with new and existing employees. Explore these considerations in more detail below.
1. Know Your State’s Standing on Non-Competes
Recognition and enforcement of non-compete agreements vary by state. California, Oklahoma, North Dakota, and Minnesota have fully banned non-compete agreements, according to the Economic Innovation Group. While some states have no restrictions, others limit non-competes based on income or individual state rulings. It’s best to research your state’s policies.
2. Stay Up to Date About the FTC Ruling
On August 13, 2025, President Donald Trump announced his revocation of former President Biden’s Executive Order that prompted the FTC’s proposed ban on non-compete agreements. The U.S. Department of Justice’s Office of Public Affairs issued a press release in support of President Trump’s actions that also assured Americans it will “continue its work to recalibrate and modernize the Federal approach to competition policy to suit the needs of our dynamic and innovative economy.”
3. Know the Pros and Cons of Non-Competes Before Issuing Them
Non-compete agreements help protect proprietary information, reduce employee turnover, and decrease the potential for customer loss. However, some consider them to be an outdated practice and inapplicable for some positions. These types of restrictive agreements can also discourage skilled candidates, impact their ability to obtain future work, and quickly lead to legal battles.
4. Confirm New Hires Aren’t Violating a Non-Compete Clause
Staffing agencies can confirm that new hires aren’t violating a non-compete clause by completing background checks on candidates and reviewing employment history to reveal any instance of working for a competitor. Non-compete agreements can also be the subject of an interview question or appear on a form that new employees must sign during the onboarding process. You can also add a protective clause in your employment offer to explain that employment is contingent on the absence of any applicable non-compete agreements.
5. Prioritize Open and Honest Communication With Your Employees
Fostering transparent dialogue regarding non-compete agreements helps build trust among prospective candidates and employees. Clarify these types of agreements before they’re signed. Documenting the process, especially when employees change positions, can also help support open communication.
In-Summary: How Staffing Non-Compete Agreements Work
Staffing non-compete agreements may not always be necessary, but they’re a valuable tool that can help safeguard a client’s business interests. Explore the role of non-compete agreements in your employment practices to determine how they contribute to greater success in locating the best candidates. You might be surprised by your results.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
