The Open Markets Institute has filed an amicus brief in Ryan v. FTC, marking the second appellate case in which Open Markets has defended the Federal Trade Commission’s (FTC) landmark prohibition on non-compete clauses. Last November, Open Markets filed a similar amicus brief in Villages v. FTC, the first major challenge to the rule.

About the Case:
In Ryan v. FTC, the U.S. District Court for the Northern District of Texas blocked the FTC’s non-compete rule from taking effect nationwide, ruling that the FTC exceeded its statutory authority and that the rule was arbitrary and capricious. The case is now on appeal before the Fifth Circuit Court of Appeals.

Key Arguments from Open Markets’ Brief:
The Open Markets brief emphasizes that non-compete clauses—which restrict workers ability to seek alternative employment—are inherently coercive and constitute an unfair method of competition. It argues:

• Consistency with FTC Authority: The FTC’s ban on non-compete agreements aligns with the FTC Act and decades of the agency’s policymaking aimed at safeguarding fair competition.

• Not Arbitrary or Capricious: The FTC’s comprehensive analysis of evidence demonstrated the necessity of a complete ban to address the widespread harms caused by non-compete clauses. Employers’ use of these agreements stifles competition, suppresses wages, and limits worker mobility.

“The FTC acted rationally when it enacted a complete ban,” Sandeep Vaheesan, Open Markets legal director, said. “The overwhelming evidence compiled by the commission confirmed that non-compete clauses harm workers and competition alike. While the FTC considered more targeted alternatives, it reasonably concluded that a full prohibition was necessary to combat the coercive effects of these agreements and uphold fair market practices.”

A History of Advocacy Against Non-Compete Clauses:
Open Markets has been at the forefront of the fight against non-compete agreements:

• In 2019, Open Markets led a petition, joined by the AFL-CIO, SEIU, and other labor unions and public interest groups, urging the FTC to adopt a regulatory ban on non-compete clauses.

• Through sustained advocacy, Open Markets and its partners successfully pushed for the FTC’s historic rule prohibiting these restrictive agreements.

Why This Matters:
Non-compete clauses impact millions of American workers, limiting their ability to change jobs, negotiate higher wages, and pursue career advancement. By defending the FTC’s rule, Open Markets aims to protect workers' rights, foster fair competition, and prevent corporations from exploiting their market power at the expense of labor mobility and innovation.