Ryan Challenges New Non-Compete Rule Issued by Federal Trade Commission (FTC)

DALLAS (April 23, 2024) – Ryan, a leading global tax services and software provider, is challenging a new rule issued by the Federal Trade Commission (FTC) that outlaws non-compete employment agreements. The Firm’s lawsuit in federal court in Texas is the first challenge to the FTC’s lawless action, which imposes an extraordinary burden on businesses seeking to protect their intellectual property (IP) and retain top talent within the professional services industries. The Firm seeks to prevent the immense, undue burdens the FTC’s rule would impose on service-driven companies of every size nationwide.

The FTC’s rule would upend companies’ IP protections and talent development and retention by invalidating millions of employment contracts and nullifying the laws of dozens of states, according to the FTC’s own public estimation. Ryan sought to dissuade the FTC from this action by submitting last spring a 54-page public comment against the FTC’s proposed rule.  Ryan explained how non-compete agreements are an important tool for firms to protect their IP and foster innovation.  Without them, firms could hire away a competitor’s employees just to gain insights into their competitor’s intellectual property. The FTC’s decision to ban an important tool for protecting IP will inhibit firms from investing in that IP in the first place, resulting in a less innovative economy. The Firm’s complaint, filed in the United States District Court for the Northern District of Texas, contends that the FTC lacks the authority to prohibit non-compete agreements. It also argues that the FTC itself is unconstitutionally structured. 

“For more than three decades, Ryan has served as a champion for empowering business leaders to reinvest the tax savings our Firm has recovered to transform their businesses,” said Ryan Chairman and CEO G. Brint Ryan. “Just as Ryan ensures companies pay only the tax they owe, we stand firm in our commitment to serve the rightful interest of every company to retain its proprietary formulas for success taught in good faith to its own employees.”

Among other benefits, non-compete agreements incentivize companies to invest in research and development, empower collaborative work environments, and instill a commitment to aiding personnel growth and development. Non-compete agreements also promote worker training, increasing their earnings, by solving a free-rider problem that inhibits firms from investing in their employees. These arrangements, mutually agreed upon by the employer and employee, enable all parties to maximize their output in an open and dynamic work environment. Innovation fueled by collaboration is critical to the modern economy.

“Upending a long history of evaluating non-compete agreements through case-by-case analysis, the Commission instead has bluntly struck at nearly all existing agreements,” said John Smith, Ryan Chief Legal Officer and General Counsel. “With history, logic, law, and the Constitution on our side, we look forward to righting this wrong by the FTC against employees and employers alike.”  

Ryan has engaged Gene Scalia, former US Secretary of Labor, and his team at Gibson, Dunn & Crutcher LLP to challenge together the FTC’s new rule.

À propos de Ryan

Ryan, est un fournisseur mondial primé pour ses services et logiciels fiscaux.  La société représente actuellement le plus grand cabinet au monde spécialisé exclusivement en fiscalité des entreprises. Le cabinet offre une gamme intégrée de services fiscaux fédéraux, provinciaux et internationaux sur une base multinationale, incluant des services de recouvrement fiscal, de conseil, de défense, de conformité et de technologie. Ryan a été récipiendaire du prix international pour l’excellence de son service, décerné par le Customer Service Institute of America (CSIA) à 11 reprises, pour son engagement envers un service à la clientèle de classe mondiale. Grâce à l’environnement de travail dynamique myRyan, largement reconnu comme le plus innovateur du secteur des services fiscaux, l’équipe multidisciplinaire de Ryan, qui compte plus de 4 800 professionnels et associés, dessert plus de 30 000 clients dans plus de 80 pays, dont un grand nombre de sociétés font partie du classement Global 5000. Pour de plus amples renseignements sur Ryan, visitez https://ryan.com/canada-fr/.

PERSONNE-RESSOURCE POUR LES MÉDIAS

Melodie Elliott
Première directrice, contenu et communication marketing
Ryan
+1 972.934.0022
melodie.elliott@ryan.com