S6 Ep113: 2025 Update on Federal Trade Commission Ban on Noncompete Agreements

Comment on the Show by Sending Mark a Text Message.

I am tracking the developments of the legal case of Ryan LLC v. Federal Trade Commission, 5th Circuit Court of Appeals case, 24-10951.  

This episode is part of my initiative to provide access to important court decisions  impacting employees in an easy to understand conversational format using AI.  The speakers in the episode are AI generated and frankly sound great to listen to.  Enjoy!

A heated battle is unfolding over the Federal Trade Commission's ambitious attempt to ban non-compete agreements nationwide—a move that would directly impact an estimated 30 million American workers and potentially reshape the entire employment landscape.

At stake is the fundamental balance between worker mobility and business protection. The FTC presents compelling evidence that non-competes suppress wages, stifle innovation, and restrict career advancement. They highlight cases like a software engineer whose promising app idea remained undeveloped for two years due to restrictive post-employment clauses. Their mountain of economic studies and worker testimonials paints these agreements as harmful shackles on both individual opportunity and broader economic growth.

Meanwhile, the Chamber of Commerce and affected businesses are fighting back fiercely, arguing the FTC has dramatically overstepped its authority. They've invoked the "major questions doctrine," essentially claiming that such sweeping economic regulation requires explicit congressional approval. Companies like Ryan LLC contend that without non-competes, they face existential threats from employee poaching and client theft after investing substantially in specialized training. The constitutional questions raised go far beyond employment contracts to the very heart of regulatory power in America.

The case has already seen significant legal developments, with a district court temporarily halting implementation through a nationwide injunction. As this battle potentially heads toward the Supreme Court, the implications extend beyond non-competes to fundamental questions about agency authority and the separation of powers. Whether you've personally signed a non-compete or not, this landmark case will likely reshape how regulations are crafted and enforced across industries for decades to come. What's your experience with non-competes, and do you think they protect legitimate business interests or unfairly restrict worker freedom? 

If you enjoyed this episode of the Employee Survival Guide please like us on Facebook, Twitter and LinkedIn. We would really appreciate if you could leave a review of this podcast on your favorite podcast player such as Apple Podcasts. Leaving a review will inform other listeners you found the content on this podcast is important in the area of employment law in the United States.

For more information, please contact our employment attorneys at Carey & Associates, P.C. at 203-255-4150, www.capclaw.com.

Disclaimer: For educational use only, not intended to be legal advice.

Episode Transcript

Speaker 1 (00:00):
All right.
So you've really buried us inpaperwork this time.
It's like a whole stack oflegal briefs and documents, all
about the FTC's attempt to bannon-competes.

Speaker 2 (00:11):
Yeah.

Speaker 1 (00:12):
It looks like we've got briefs from the FTC
themselves, obviously, pushbackfrom the Chamber of Commerce and
even a statement from a companycalled Ryan LLC, who seems to
be right in the middle of it all.

Speaker 2 (00:23):
Yes.

Speaker 1 (00:23):
So are you ready to dive into this one?

Speaker 2 (00:25):
Oh, absolutely, and it's a really interesting time
to be looking at this issue.
You know, this is not just somekind of legal technicality.
Here the FTC is really aimingto like fundamentally change the
rules of the game for anestimated 30 million workers Wow
Across all sorts of industries.

Speaker 1 (00:43):
Yeah, that is a huge number of people it is.
So maybe just to get ourlisteners up to speed.
Yeah, could you quickly explainexactly what the FTC is trying
to do with this non-compete rule?

Speaker 2 (00:52):
Sure.
So essentially they're tryingto make it illegal for companies
to use non-compete agreementsin almost any situation.
So you know those clauses thatyou see in contracts that say
like if you leave this job youcan't go work for a competitor
for, you know, six months or ayear or whatever it is yeah.
Poof gone.

Speaker 1 (01:09):
Wow.

Speaker 2 (01:09):
At least that's the FTC's goal.

Speaker 1 (01:11):
That's pretty sweeping.
It is no wonder everybody'slawyering up.

Speaker 2 (01:14):
Yeah.

Speaker 1 (01:18):
So let's start with the FTC side of things.

Speaker 2 (01:21):
What's the main thrust of their argument here?
Well, they're really coming outswinging.
They're arguing thatnon-competes are inherently
unfair methods of competitionwhich are illegal under the FTC
Act, and they're not just goingafter you know, specific
companies that are using them ina bad way, or whatever.
They're really saying that thevery existence of these
agreements is harmful to workersand stifles the entire economy.

Speaker 1 (01:43):
OK, but how are they backing that up Like do they
have any specific examples ofthis?

Speaker 2 (01:46):
Yeah, absolutely so.
For example, in their briefthey talk about the case of the
software engineer who was boundby a non-compete after leaving
his job.

Speaker 1 (01:57):
Oh really.

Speaker 2 (01:58):
And he had, you know, this great idea for a new app,
but he couldn't develop it fortwo years because of the
agreement.
Wow, idea for a new app, but hecouldn't develop it for two
years because of the agreement.
And you know, FTC argues thatthis kind of situation is
preventing innovation across allsorts of different industries.

Speaker 1 (02:11):
So it's not even just about, you know, protecting
workers from some kind of youknow, unfair contract.
They're really saying thatthese agreements are holding
back you know progress, in a way.

Speaker 2 (02:22):
Exactly yeah.
And they also claim thatnon-competes suppress wages by
limiting workers' options, youknow, makes it harder for them
to negotiate for better pay andbenefits if they can't, you know
, easily go work for acompetitor.

Speaker 1 (02:35):
Yeah, thanks Anne.

Speaker 2 (02:36):
And they also argue that these agreements discourage
companies from investing andtraining for their employees.

Speaker 1 (02:42):
Okay, how so?

Speaker 2 (02:42):
Well, because they're afraid that the employees will
just, you know, take thoseskills and go to a competitor,
right?
So it's kind of a lose-losesituation.

Speaker 1 (02:50):
Yeah, it sounds like they're kind of painting this
picture of like a ripple effectwhere, you know these agreements
are impacting everything from,you know, individual salaries to
, like, the competitiveness ofwhole industries.

Speaker 2 (03:00):
That's their core argument.
Yeah, and they're reallybringing like a mountain of
evidence to support it.
They've got economic studies,they've got public comments from
workers and businesses and youknow their own internal analyses
.

Speaker 1 (03:13):
Wow.

Speaker 2 (03:13):
They're really trying to demonstrate that this is a,
you know, carefully consideredconclusion and not just some
kind of knee jerk reaction.

Speaker 1 (03:25):
Yeah, but obviously not everyone is buying it.
The.

Speaker 2 (03:26):
Chamber of Commerce, for one, is pushing back pretty
hard.
Oh yeah, definitely their briefcomes out with guns blazing.

Speaker 1 (03:29):
OK.

Speaker 2 (03:30):
They basically say that the FTC is massively
overstepping its authority.

Speaker 1 (03:35):
Wow.

Speaker 2 (03:35):
OK, they argue that the FTC Act doesn't actually
give the agency the power toissue, you know, like a blanket
ban on a business practicethat's been around for so long.

Speaker 1 (03:48):
So it's kind of a power struggle then, like
they're saying that the FTC istrying to act like Congress, you
know, making new laws insteadof just enforcing the existing
ones.

Speaker 2 (03:52):
That's really the heart of their argument.
Yeah, they're calling this aclassic major questions doctrine
case and this doctrinebasically says that you know,
when an agency is trying toregulate something that has like
huge economic and politicalimplications, they need clear
direction from Congress to do so.
And the chamber is arguing thatCongress never gave the FTC

(04:14):
this kind of power overnon-competes.

Speaker 1 (04:18):
So their argument really hinges on, like, the
scope of the FTC's authority andwhether they're exceeding it
with this rule.
Okay, well, what about Ryan LLC?

Speaker 2 (04:28):
I mean, they're coming at this from kind of a
more practical, businessoriented perspective right,
exactly, yeah, they're a taxconsulting firm and their brief
basically argues that banningnon-competes would be like a
direct threat to their business.

Speaker 1 (04:41):
Oh, wow.

Speaker 2 (04:42):
They say that they rely on these agreements to
protect their trade secrets andclient relationships, which
they've built up over many years.

Speaker 1 (04:48):
So for them it's really about the potential for
like immediate harm, Likethey're imagining.
You know, employees walking outthe door and taking clients
with them to a competitorExactly.

Speaker 2 (04:59):
Yeah, yeah.
And they argue that withoutnon-competes, they'd constantly
be honorable to poaching andthey wouldn't be able to invest
as much in specialized trainingfor their employees.

Speaker 1 (05:10):
Yeah.

Speaker 2 (05:10):
Because you know what's the point if they're just
going to leave, right.
So they're basically sayingthat this rule would throw their
whole industry into chaos.

Speaker 1 (05:18):
Wow.

Speaker 2 (05:19):
Yeah.

Speaker 1 (05:20):
It's interesting how they're highlighting that
tension, you know, betweenprotecting businesses on the one
hand and then kind of fosteringa competitive market that
benefits everyone on the otherhand.

Speaker 2 (05:30):
Yeah, it's a.
It's a key philosophicalquestion at the heart of this
whole debate and and it actuallygets even more complicated when
you start to look at thoseconstitutional concerns that the
Chamber of Commerce is raising.

Speaker 1 (05:42):
Yeah, they're not just saying the FTC is
overreaching concerns that theChamber of Commerce is raising.
Yeah, they're not just sayingthe FTC is, you know,
overreaching, they're actuallykind of questioning the whole
structure of the agency andwhether it even allows for this
kind of power.

Speaker 2 (05:50):
Exactly and with, you know, limited presidential
oversight, you know, is thateven constitutional?

Speaker 1 (05:55):
Yeah, so hold on.
I'm talking about like apotential constitutional crisis
over non-compete agreements here.
I mean, that seems like apretty big leap.

Speaker 2 (06:03):
Well, it might seem like a stretch at first, but it
really does get to the core ofhow our government is designed.
You know, the opposition isbasically arguing that the FPC
is acting like a mini-Congress.
You know they're unilaterallymaking major economic policy
without any of the checks andbalances that the Constitution
requires, and they're sayingthat.

(06:24):
You know this kind of powergrab upsets the separation of
powers and it could haveimplications far beyond just you
know this one rule aboutnon-competes that's a.

Speaker 1 (06:36):
that's a pretty heady argument, but it sounds like
the FTC is prepared to defendtheir position.
I mean, they obviously thinkthey're on solid legal ground.

Speaker 2 (06:44):
Oh yeah, definitely, and a lot of it hinges on their
interpretation of the wordprevent in the FTC Act.
They're basically saying thatprevent gives them broad
authority to regulate entireindustries proactively.
You know, they don't have towait for someone to break the
law.
They can step in and preventthe harm from happening in the
first place.

Speaker 1 (07:05):
So it all comes down to like one word it's amazing
how these like tiny details canbecome like these huge
battlegrounds in legal cases.

Speaker 2 (07:12):
Absolutely.
It's like they're trying todecipher some kind of secret
code.
You know where each side istrying to unlock the.
You know the true meaninghidden within the language of
the law and actually speaking ofcode.
Another interesting point theChamber of Commerce brings up is
that Congress specificallygranted the FTC rulemaking power
for unfair or deceptivepractices, but they were totally

(07:36):
silent on unfair methods ofcompetition.

Speaker 1 (07:39):
So they're saying like if Congress wanted the FTC
to have this power, they wouldhave written it down explicitly.

Speaker 2 (07:44):
Exactly.
It's a classic argument.
You know statutoryinterpretation.
The opposition is basicallysaying that.
You know, congress knew what itwas doing and they chose to
give the FTC you know limitedauthority in this particular
area.

Speaker 1 (07:57):
So we've got this back and forth over.
You know the FTC's authorityand how to interpret the law,
but what about the evidenceitself?
I mean, is the FTC actuallyproving that non-competes are
always harmful?

Speaker 2 (08:07):
Well, that's another major point of contention.
You know, the FTC cites allthese studies showing that
non-competes suppress wages andstifle innovation.
But the opposition points outthat a lot of those studies are
really focused on specificstates, not necessarily the
nationwide impact that a banwould have.

Speaker 1 (08:25):
So are they saying that the FTC's evidence is kind
of like not representativeenough to justify such a
sweeping rules like trying topredict the weather for the
whole country based on, like acouple of weather stations?

Speaker 2 (08:36):
Yeah, that's a good analogy.
The Chamber of Commerce isarguing that the FTC is
overgeneralizing from limiteddata and that a nationwide ban
could have all these unintendedconsequences that those state
level studies just don't capture.

Speaker 1 (08:48):
OK, well, what about the potential costs of this rule
?
I mean, we've heard Ryan LLC'sconcerns about losing trade
secrets and clients, but doesthe chamber make any broader
economic arguments?

Speaker 2 (08:58):
Oh yeah they.
They claim that the FTC's costbenefit analysis is like totally
incomplete and ignores, youknow all these significant
downsides.
For one thing, they argue thatbanning non-competes could
actually discourage companiesfrom investing in training for
their employees.
Oh interesting Because there'sno guarantee that those

(09:19):
employees will actually stickaround to use those skills you
know.

Speaker 1 (09:22):
So instead of protecting workers it could kind
of backfire and make them likeless desirable hires.

Speaker 2 (09:28):
Yeah, it's kind of a weird twist, right?
Yeah, and they also raiseconcerns about, you know,
increased litigation even ifit's a different kind of
litigation than we have now.

Speaker 1 (09:37):
Yeah.

Speaker 2 (09:37):
They argue that without you know these clear
non-compete agreements,companies might be more likely
to sue each other over tradesecret theft or unfair
competition.
You know, so you could end upwith even more legal battles and
uncertainty.

Speaker 1 (09:50):
It sounds like they're saying the FTC is trying
to solve one problem, right,but they might be creating a
whole bunch of new ones in theprocess.

Speaker 2 (09:57):
Right, and you know.
They argue that all of thesecosts could ultimately trickle
down to consumers in the form ofhigher prices.

Speaker 1 (10:02):
Oh OK.

Speaker 2 (10:03):
You know their argument is that when businesses
face more uncertainty and morerisk, you know those costs often
get passed along.

Speaker 1 (10:11):
So the Chamber of Commerce is painting this
picture of all these unintendedconsequences.
You know, less investment, morelawsuits and potentially higher
prices for consumers.
Right, it's a pretty starkcontrast to the FTC's vision of,
you know, a more competitiveand dynamic economy.

Speaker 2 (10:28):
Yeah.

Speaker 1 (10:28):
But you know, this whole debate has really got me
thinking about my ownexperiences.

Speaker 2 (10:33):
Oh yeah, what comes to mind?

Speaker 1 (10:34):
Well, I've, you know, I've signed a few non-competes
in my time and, honestly, Ialways felt kind of trapped by
them.
You know, yeah, it's like, evenif you're unhappy in a job, the
thought of being like legallybarred from working in your
field for, you know, a year ormore, that's pretty daunting.

Speaker 2 (10:50):
Right.

Speaker 1 (10:50):
It definitely makes you think twice about leaving,
even if it's the right move foryou.

Speaker 2 (10:54):
Yeah, that's a.
That's a really important point.
You know that psychologicalimpact of non-competes is
something that the FTC reallyemphasizes in their brief.

Speaker 1 (11:01):
OK.

Speaker 2 (11:02):
You know they argue that these agreements create
this chilling effect on workermobility.
Yeah, you know, it discouragespeople from even like exploring
new opportunities.

Speaker 1 (11:12):
And that makes sense, right, Like if you're
constantly worried about likelegal repercussions you're less
likely to, you know, take risksor start your own business or
even just negotiate for betterpay at a different company.

Speaker 2 (11:25):
Exactly.
You know the FTC argues thatthis fear factor ultimately
hurts innovation and economicgrowth.
You know they want to empowerworkers to pursue their best
interests without being shackledby, you know, these overly
restrictive contracts.

Speaker 1 (11:40):
But on the flip side, you know, I can also kind of
see the argument for businesseswanting to protect their
investments.

Speaker 2 (11:47):
Yeah.

Speaker 1 (11:47):
Like, if a company spends a lot of time and money
you know training an employee,it seems kind of fair that
they'd want some assurance thatthose skills won't immediately
be used against them by acompetitor.

Speaker 2 (11:57):
Yeah, that's really the heart of the debate, you
know, finding that right balancebetween protecting businesses
and, you know, fostering acompetitive market that benefits
everyone.
And that's where you know thiscase could have ripple effects
far beyond non-competes.
You know it's setting aprecedent for how much power
agencies like the FTC have toreally reshape entire industries

(12:19):
.

Speaker 1 (12:19):
So, even if you're not directly affected by
non-competes, this case couldimpact you know how other
regulations are crafted andenforced in the future.

Speaker 2 (12:29):
Absolutely yeah.
The outcome of this case couldeither, you know, embolden
agencies to take a moreassertive role, or it could
force them to kind of, you know,rein in their ambitions and
defer more to Congress.
It all depends on how thecourts ultimately interpret the
FTC's authority in this case.

Speaker 1 (12:46):
So where do things stand now?
Like is there any indication ofwhich way this legal battle
might swing?

Speaker 2 (12:52):
Well, it's already been kind of a roller coaster
ride.
You know, a district courtactually sided with the Chamber
of Commerce and issued anationwide injunction against
the rule.
So basically putting it on holdfor now.

Speaker 1 (13:03):
So round, one goes to the opposition.

Speaker 2 (13:05):
For now, yeah, but the FTC is appealing that
decision.
So you know, this fight is farfrom over.
Oh wow, it could easily end upbefore the Supreme Court, which
would obviously have massiveimplications for the balance of
power between agencies andCongress.

Speaker 1 (13:20):
Yeah, a potential Supreme Court showdown.
I mean that definitely raisesthe stakes.
It sounds like this is a caseworth watching closely, no
matter what industry you're in.

Speaker 2 (13:28):
Absolutely.
You know, this deep dive hasreally revealed not just a legal
battle over non-competes but adeeper struggle over the very
nature of regulatory power inAmerica.
You know this case could have alasting impact on how agencies
operate and how businessesfunction, you know, for years to
come.

Speaker 1 (13:46):
So what's the?
You know what's the maintakeaway for our listener who's
been waiting through all these?
You know, legal briefs with us.
What's the?
So what for them?

Speaker 2 (13:53):
I think the key takeaway is that you know even
these seemingly technical legaldisputes can have really
profound consequences foreveryone.
You know this case is areminder to pay attention to the
regulations that are beingdebated out there and the
potential impact that could haveon your work, your industry,
even the broader economy.

Speaker 1 (14:13):
It's also a reminder that you know there are often
valid arguments on both sides ofthese really complex issues.
It's not always a clear cutcase of you know good versus bad
.

Speaker 2 (14:23):
Right.

Speaker 1 (14:24):
And it's important to you know, try to understand the
nuances and the trade-offsinvolved.

Speaker 2 (14:28):
Exactly.
And as this story, you know,continues to unfold, I really
encourage our listener to youknow, think critically about the
arguments, the evidence, theimplications for themselves and
the world around them.

Speaker 1 (14:39):
Yeah, don't just accept what you hear at face
value, you know, do your ownresearch.
Yeah, accept what you hear atface value, do your own research
, consider differentperspectives and stay informed
about those potential rippleeffects.
That's what makes being quoteunquote well-informed so
rewarding.
It really empowers you to makeyour own judgments and kind of
navigate a complex world.

Speaker 2 (14:56):
And who knows, maybe one day you'll be sending us
some source material for a deepdive.
We're always up for a challenge.

Speaker 1 (15:02):
All right.
Thanks for joining me for thisdeep dive.

Speaker 2 (15:04):
My pleasure.