Ryan Challenges New Non-Compete Rule Issued by Federal Trade Commission (FTC)
April 23 2024 - 4:43PM
Business Wire
Tax Services Firm Leads the Charge to Protect
Intellectual Property (IP) and Talent Retention for Professional
Services Companies, Filing Suit Against the FTC in Federal
Court
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.
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.
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Melodie Elliott Director, Public Relations Ryan 972.934.0022
melodie.elliott@ryan.com