Dallas-based Ryan sues FTC in first challenge to new 'non-compete' rules » Dallas innovates

Ryan Chairman and CEO G. Brint Ryan [Photo: UNT]

Ryan, a Dallas-based global tax services and software provider, has filed a lawsuit in federal court challenging the Federal Trade Commission's new non-compete rules. This is the first challenge filed against the rule, and according to the FTC's own public assessment, the rule “will invalidate millions of employment contracts and invalidate the laws of dozens of states.” This fundamentally undermines a company's ability to protect intellectual property and develop and retain talent,” Ryan said.

Submitted In the United States District Court for the Northern District of TexasThe complaint says the new rules “place an extraordinary burden on companies seeking to protect their intellectual property and retain top talent in the professional services industry.” Mr. Ryan seeks to stop the “incalculable and unfair burden that the FTC's rules would impose on service-driven companies of all sizes across the country.”

FTC rules aim to “promote competition by prohibiting anticompetitive conduct nationwide.”

FTC Chair Lina Khan [Photo: Casmoe Photography via FTC.gov]

On Tuesday, the FTC issued a final rule that “promotes competition by prohibiting non-competes across the country, protects workers' fundamental freedom to change jobs, fosters innovation, and encourages new business formation.” announced.

The FTC states that non-competes are “broad and often exploitative practices that impose contract terms that prevent workers from taking new jobs or starting new businesses,” and that they often “They are forced to either stay in the job they want to leave or take on another burden,” he said. Significant harms and costs are incurred, including being forced to move to a lower-paying field, being redeployed, being forced to quit altogether, or being forced to defend against costly litigation. ”

The FTC noted that an estimated 30 million workers, nearly one in five Americans, are subject to non-compete clauses.

“Non-compete clauses keep wages low, stifle new ideas, and prohibiting non-compete clauses would create more than 8,500 new startups a year,” FTC Chairman Lina Khan said in a statement. “It takes away the dynamism of the U.S. economy.” “The FTC's final rule prohibiting non-competes will ensure Americans have the freedom to take new jobs, start new businesses, and bring new ideas to market.”

The FTC estimates that the final rule prohibiting anti-competitive conduct will “result in a 2.7 percent annual increase in new business formation, resulting in more than 8,500 new business creations each year.” The commission said the rule is expected to “increase worker incomes, with an estimated $524 more per year for the average worker and projected to reduce health care costs by up to $194 billion over the next 10 years.” “It has been done.” Additionally, the final rule is expected to help foster innovation, with an estimated average of 17,000 to 29,000 more patents each year over the next 10 years under the final rule. ”

Ryan emphasizes companies' “unique success formulas”

Ryan has a completely different take on this rule. That is, from the top.

“For more than 30 years, Ryan has encouraged the firm to reinvest the tax savings it collects to transform its business,” G. Brint Ryan, the firm's chairman and CEO, said in a statement. “Just as Ryan ensures that businesses pay only the taxes they owe, we serve the legitimate interests of all businesses.'' , remains steadfast in its commitment to maintaining a unique formula for success taught in good faith to its employees. ”

Last spring, Ryan filed a 54-page public comment opposing the FTC in an attempt to “dissuade” it from imposing new rules. In his comments, Ryan said non-compete agreements are “an important tool for companies to protect their intellectual property and foster innovation,” adding that without a non-compete agreement, Companies may hire competitors' employees to gain insight into their competitors' intellectual property. Ryan added that the rule prevents companies from investing in their intellectual property in the first place, “resulting in a less innovative economy.”

The company's lawsuit argues that the FTC does not have the authority to prohibit noncompete agreements. They also argue that the structure of the FTC itself violates the Constitution.

Ryan points out 'advantages' of non-compete clauses

“Non-compete agreements have the benefit of instilling a company's commitment to incentivizing investment in research and development, enhancing collaborative working environments, and supporting talent growth and development,” the Dallas-based company said in a statement. Yes,” he said in a statement. “Non-compete agreements also facilitate employee training and increase employee profits by solving the free-rider problem that prevents companies from investing in their employees. These agreed arrangements will enable all parties to maximize results in an open and dynamic working environment. Innovation driven by collaboration is critical to the modern economy.”

John Smith, Ryan's chief legal officer and general counsel, said the FTC is breaking precedent by issuing today's final rule.

“Reversing its long history of evaluating noncompete agreements through case-by-case analysis, the commission instead blatantly attacked nearly every existing agreement,” Smith said in a statement. “With history, logic, law, and the Constitution on our side, we look forward to the FTC righting this wrong for both employees and employers.”

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