Small Business Majority Files Motions to Intervene in Defense of FTC Non-Compete Ban

For Immediate Release: 
Monday, January 13, 2025

Small business advocacy group asks the Fifth and 11th Circuit Courts to allow it to defend Federal Trade Commission rule prohibiting non-compete agreements in case the Trump administration does not support the rule

Washington, D.C.—Small Business Majority, a national small business organization that empowers America's diverse entrepreneurs to build a thriving and equitable economy, today asked the United States Courts of Appeals for the Fifth and 11th Circuits for permission to intervene in two lawsuits challenging the Federal Trade Commission’s (FTC) final rule that would ban the enforcement of most non-compete clauses in employment contracts.  

In its motion in the cases of Ryan LLC. v. FTC and Properties of the Villages, Inc. v. FTC, Small Business Majority explains that it should be allowed to intervene because it is likely that the Trump administration will abandon defense of the non-compete rule. If that occurs, Small Business Majority says that it should be allowed to continue the defense on the basis that many small businesses are disadvantaged by non-compete clauses, which make it more difficult for small firms to find and hire new talent. Small Business Majority also asserts that non-compete contracts hold back aspiring entrepreneurs seeking to launch new small businesses.

“We asked to become a party in two lawsuits challenging the ban on non-competes because we are not confident that the incoming Trump administration will defend the FTC rule,” said Small Business Majority Founder & CEO John Arensmeyer. “We are prepared to continue the fight in place of the FTC on behalf of entrepreneurs everywhere who simply want an opportunity to pursue their dreams of small business ownership but have been prohibited from doing so because of unfair, unenforceable and unnecessary non-compete agreements. Small businesses overwhelmingly want a level playing field, and non-competes are a threat to the free, fair and open competition that is essential to a thriving and equitable economy.”

Small Business Majority’s research revealed that more than 33% of small business owners were prevented from hiring an employee due to a non-compete agreement, and nearly 50% said that they have been subject to a non-compete agreement that prevented them from starting or growing a business of their own.  

“At one time I required all of my employees to sign non-compete agreements but decided to end that practice because I felt it was hurting my ability to hire the most talented workers,” said Shirley Modlin, owner of 3D Design and Manufacturing, LLC in Powhatan, Va. “I also went a step further: For employees who signed a non-compete in the past and still work for me, I voided their agreements. Since making this change, my business has not suffered any financial harm. I firmly believe that as workers gain skills and experience throughout their careers they must be allowed to use those skills and experiences to further their livelihoods in ways that are in the best interest of the workers and their families.”

In April 2024, the FTC voted to finalize a rule banning the enforcement of most non-compete agreements, with the exception of existing non-competes  for “senior executives” – defined as those earning more than $151,164 per year and who hold “policy-making positions.” The FTC estimated this new rule would lead to the launch of more than 8,500 new businesses yearly. But before that rule could be implemented, the U.S. District Court for the Northern District of Texas ruled that the non-compete ban could not be enforced. The U.S. District Court for the Middle District of Florida also blocked the rule from taking effect in a separate case. In a third case (ATS Tree Services, LLC v. FTC), however, the U.S. District Court for the Eastern District of Pennsylvania declined to block the non-compete rule. The result of these split decisions is that the U.S. Supreme Court may eventually take up the issue.  

“While we hope the government continues defending the non-compete rule, we’re prepared to take up this cause on behalf of all the workers and small business owners across America who deserve the economic freedom to make a living and pursue their dreams,” said Counsel of Record Michael Lieberman of Fairmark Partners, LLP. 

 

About Small Business Majority

Small Business Majority is a national small business organization that empowers America's diverse entrepreneurs to build a thriving and equitable economy. We engage our network of more than 85,000 small businesses and 1,500 business and community organizations to advocate for public policy solutions and deliver resources to entrepreneurs that promote equitable small business growth. Our deep connections with the small business community along with our scientific research enable us to educate the public about key issues impacting America’s entrepreneurs, with a special focus on advancing the smallest businesses and those facing systemic inequalities. Learn more about us on our website and follow us on TwitterFacebook and Instagram.

Press State: 
National