Ryan Lawsuit Halts Federal Trade Commission (FTC) Ban on Non-Compete Agreements

July 03, 2024 at 18:35 PM EDT

Federal Judge Issues a Stay and a Preliminary Injunction Against the FTC in Response to Tax Services Firm’s Challenge

Today, a federal court ruled for Ryan (a leading global tax services and software provider) and against the U.S. Federal Trade Commission (FTC), halting the FTC’s ban on non-compete agreements set to take effect this fall. U.S. District Court Judge Ada Brown of the Northern District of Texas issued a stay and a preliminary injunction against the FTC in response to Ryan’s lawsuit, which challenges the new rule. The judge’s decision halts implementation of the rule, originally set to take effect on September 4. The judge stated she intends to issue a final decision on the merits by August 30, 2024.

Ryan’s lawsuit, filed on April 23, challenges the FTC’s authority to issue such a rule, which imposes an extraordinary burden on business owners seeking to protect their intellectual property and to retain top talent within the professional services industry. Ryan Chairman and CEO G. Brint Ryan describes the FTC ban as “one of the most outrageous examples of government overreach that I have seen.”

In her ruling, Judge Brown stated, “the Court concludes the Commission has exceeded its statutory authority in promulgating the Non-Compete Rule, and thus Plaintiffs are likely to succeed on the merits.” She emphasized “the role of an administrative agency is to do as told by Congress, not to do what the agency think[s] it should do.”

“The court’s decision is an important step toward invalidating a rule that burdens not only Ryan, but also Ryan’s clients, and multitudes of employers and employees across America,” said John Smith, Ryan Chief Legal Officer and General Counsel. “We’re grateful that the U.S. Chamber of Commerce and Texas Association of Business joined our case shortly after we filed it. We appreciate the many organizations—which together represent a vast swath of the American economy—that filed briefs supporting Ryan’s position.”

Smith added, “Ryan will pursue a final decision on the merits that strikes down the FTC’s unlawful ban. In the same spirit, the U.S. Supreme Court in recent days has reasserted constitutional and statutory constraints to reverse overreach by the administrative state. This week, Americans celebrate our nation’s Declaration of Independence from an overreaching royal crown. Non-compete agreements predate the American Revolution, and our lawsuit seeks to preserve a robust freedom of contract for generations of enterprising Americans to come.”

About Ryan

Ryan, an award-winning global tax services and software provider, is the largest Firm in the world dedicated exclusively to business taxes. With global headquarters in Dallas, Texas, the Firm provides an integrated suite of federal, state, local, and international tax services on a multijurisdictional basis, including tax recovery, consulting, advocacy, compliance, and technology services. Ryan is an 11-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan’s multidisciplinary team of more than 4,800 professionals and associates serves over 30,000 clients in more than 80 countries, including many of the world’s most prominent Global 5000 companies. More information about Ryan can be found at ryan.com.