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While many believe that non-compete agreements aren’t enforceable, the truth of the matter is that it can depend on many different factors. Raimonde v. Van Vlerah, heard by the Ohio Supreme Court, set forth criteria to be used for determining the legality of a non-compete back in 1975. While there hasn’t been much movement since, the factors set out in that case remain just as valid for consideration today.
Here’s what you need to know.
What is a Non-Compete Agreement?
In simple terms, a non-compete in Ohio is a contract between an employer and employee that states that the employee cannot compete with the employer after termination.
The terms refer to employment with competitors within a time period that usually extends no longer than a year.
A non-compete in Ohio is put in place to avoid issues for the employer. A good example of this would be an ex-employee soliciting former customers; it is also to avoid the sharing of timely, confidential information.
A non-compete agreement keeps you from pursuing a career with logical choices within your existing industry. This, of course, can result in a drastic reduction in the scope of your career options.
An employer is not required to provide anything in exchange for you signing a non-compete agreement. They only have to provide employment without any determined length of time guaranteed.
Are Non-Competes Enforceable in Ohio?
Non-compete agreements are enforceable in Ohio. However, there are laws in place that dictate that a non-compete agreement must be “reasonable” in order to protect the employee.
A reasonable non-compete agreement in Ohio must:
- Be no greater than is required for the employer’s protection of a legitimate interest
- Not impose an undue hardship on you
- Not be injurious to the public
Some of the most common provisions found in an acceptable non-compete agreement may include:
Confidentiality: This keeps the terms of the non-compete agreement confidential. This provision must include exceptions such as discussion with a lawyer or accountant.
Non-Disparagement: This provision prohibits both you and your former employee from making negative comments about one another. This stops you from trying to take business away from your former employee by making them look bad. It also protects your reputation when pursuing employment.
Opportunity to Review and Consider the Agreement: The employer will usually include a line that states you read and understand the agreement. Be certain you do read and understand the contract because this will hold up in court. You will not be able to say you did not see this in the agreement.
Severability: This is important as even if a court finds a specific term to be invalid, the remainder of the provisions will still be valid. This protects the employer’s rights, not yours.
Applicability to Successor and Assigns: This means that should the company you are working for be purchased or merged, your non-compete agreement is still valid.
What Happens if I Break a Non-Compete Clause?
Non-compete agreements are enforced in courts throughout Ohio. The Ohio Supreme Court has ruled that an employee’s continued employment with an employer in which they have entered into a non-compete agreement is enough evidence that you did, in fact, make a promise not to compete.
Even if you can prove that the company has not enforced a previous non-compete in Ohio that they have signed with other employees, you alone are responsible for maintaining your own non-compete agreement. You have to follow the points you agreed to in a non-compete in Ohio, as long as they are found to be “reasonable.”
Some defenses can be used when a non-compete agreement is broken. This is generally based on the limitations outlining what constitutes a reasonable contract for a non-compete in Ohio. As long as the agreement has not imposed unreasonable limitations on you, chances are the agreement will be enforceable.
Even if the court agrees with you that the non-compete in Ohio was not reasonable, they can amend it so that it is considered to be reasonable. Either way, this will still keep you from taking a new job with a competitor.
Non-Compete Agreements and Independent Contractors
Employers are putting themselves at risk by requesting you sign a non-compete agreement.
When an independent contractor signs a non-compete agreement, this can change your status to an employee. A non-compete in Ohio can work in your favor as federal and state laws protect employees. This could change your entitlement to receive things such as workers’ compensation, unemployment insurance, or minimum wage requirements. In cases where you feel that you should have been paid a higher wage or been offered benefits, you can allege that you were employed as opposed to a contractor based on a non-compete in Ohio.
Non-compete agreements with contract workers are much more difficult to enforce than those signed with employees. This is because as an independent contractor, you require multiple contracts, often in the same industry to make a living. It is within your rights to be able to work with whomever you wish. Therefore, a non-compete in Ohio is easier to dispute.
If you do sign a non-compete agreement, a company enforcing the non-compete in Ohio is not unheard of. There are cases where the court might find that you have used information from one company to gain an unfair competitive advantage over their competition. All in all, a non-compete agreement really has little benefit for you or your clients.
Fighting a Non-Compete in Ohio
In the cases where a non-compete in Ohio is disputed, Ohio courts will evaluate the reasonability of the contract itself. The criteria used in this evaluation include:
- The duration prohibiting you from competing
- The geographic area where you are prohibited from working
- The amount of confidential information or trade secrets you were privy to
- If the non-compete is attempting to eliminate unfair competition or competition in general
- If the benefits to the employer outweigh the hardship placed on you
- If the non-compete agreement would interfere with your ability to find suitable financial support
Two common areas that will work in your favor for a non-compete in Ohio are the length of time the contract is in place, and the area it covers. If a non-compete in Ohio is longer than two years, or the area included is too broad, the court will usually deem the contract unreasonable. As well, if you are in a niche industry or market, a non-compete in Ohio will also limit your options for employment, causing undue hardship.
When entering into a non-compete in Ohio, it is always in your best interest to seek legal guidance to ensure your rights are protected. Dyer, Garofalo, Mann & Schultz has years of experience representing workers in cases that span from harassment, discrimination, non-compete contracts, and more. Get in touch with us today for a free consultation to see what we can do to help you.