Small Businesses Take Legal Action Against FTC Ban on Noncompete Agreements

May 15, 2024

Small Businesses Take Legal Action Against FTC Ban on Noncompete Agreements

WASHINGTON, D.C. (May 15, 2024) – NFIB filed an amicus brief in the case Ryan, LLC. v. Federal Trade Commission (FTC) at the U.S. District Court for the Northern District of Texas, supporting a challenge to the FTC’s final rule banning noncompete agreements. NFIB argues the FTC does not have authority to ban noncompetes. NFIB opposed the FTC’s final rule issued in April 2024. “The FTC’s final rule on non-competes is a textbook example of arbitrary rulemaking,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center. “The final rule leaves small businesses with vague conditions that make it difficult for owners to correctly comply. The FTC’s unelected bureaucrats continue to misrepresent the needs of small businesses and the impact the Commission’s flawed policies will have on Main Street. Our amicus corrects the record. We are hopeful that the Court will reject the FTC’s final rule.” The brief makes two main arguments: 1) the FTC premised the final rule on a seriously flawed cost-benefit analysis, and 2) the FTC’s fallacious and internally inconsistent “reasoning” establishes that the rule is arbitrary and capricious. NFIB filed the brief with the National Retail Federation, International Franchise Association, Associated Builders and Contractors, American Hotel & Lodging Association, National Association of Wholesale Distributers, Independent Electrical Contractors Consumer Technology Association, the Home Care Association, the Restaurant Law Center, and U.S. Council for International Business. The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court.

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