A non-compete agreement is essentially a contract between an employer and employee, in which the employee agrees not to work for a competitor for a certain length of time once his or her employment contract ends. Employers like these agreements because they guarantee that an employee they train will not immediately go to a competitor and use his or her knowledge or skills to advance a competitor’s business.
Generally, non-compete agreements are legal in Ohio, but this does not mean that the agreement will be enforced. Workers need to be aware of how a court will analyze these agreements.
As experienced Columbus attorneys, one comment we hear often is that a non-compete agreement is not valid because an employer did not enforce it with respect to other employees. The thinking seems to be that the law requires that employers be consistent, and if an employer does not enforce an agreement with respect to Peter, it cannot enforce a non-compete agreement with respect to Paul.
That is actually not the law. An employer is not required to enforce a non-compete agreement. But it always has the option to. So long as the agreement is valid, an employer can enforce it regardless of what actions it takes with respect to other employees.
For contracts to be valid, each side must get something or give something up. This is called “consideration,” and no contract is valid in Ohio without it. That rule still applies with respect to non-compete agreements, but the consideration can be your continued at-will employment. You do not have to be paid a sum of money for the agreement to be legal.
For example, Jane might be worked for six months when her employer springs a non-compete agreement on her. If she signs and continues to work, then the agreement is supported by valid consideration.
Some employers might dream of preventing their employees from ever working for a competitor, but that type of expansive non-compete agreement is invalid. Instead, the geographic and temporal limits must be reasonable. A non-compete agreement should be no broader than what is necessary to protect the employer’s legitimate interests.
Courts will look at many factors, including:
If the non-compete agreement is too broad, a court can rewrite it, which is called “blue penciling.” However, this process is unpredictable, and employees are better off negotiating a narrower non-compete agreement in the first place.
If you are reviewing an employment contract, or if an employer is trying to enforce a non-compete clause, you need legal assistance. This is a complicated area of law with few bright-line rules.
At Marshall Forman & Schlein LLC, we have guided numerous employees through the negotiation of their contracts, and we can help you, as well. For more information, please contact us to schedule a consultation.
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