Non-compete agreements have become increasingly common in Ohio, as employers seek to protect their businesses and intellectual property from competition. These agreements, also known as restrictive covenants, are legal contracts that limit an employee’s ability to work for a competitor or start a competing business after leaving their current employer.
While employees may be required to sign non-compete agreements as a condition of employment, the enforceability of such agreements in Ohio remains a hotly debated issue. Here’s what you need to know about the enforceability of non-compete agreements in Ohio.
What is a Non-Compete Agreement?
A non-compete agreement is a legal contract that prohibits an employee from competing with their employer for a certain period after leaving the company. Non-compete agreements typically include restrictions on the employee’s ability to work for competitors or start their own competing business.
These agreements can be beneficial for employers who want to protect their trade secrets, customer lists, and other confidential information from competitors. However, non-compete agreements can also limit an employee’s ability to find work within their industry, which is why they’re often a subject of controversy.
Enforceability of Non-Competes in Ohio
In Ohio, the enforceability of non-compete agreements depends on a variety of factors. Here are some of the key considerations:
1. Reasonableness: Non-compete agreements must be reasonable in scope, duration, and geographic area. This means that the restrictions must be no broader than necessary to protect the employer’s legitimate business interests.
2. Legitimate Business Interests: Employers must prove that they have a legitimate business interest to justify the non-compete agreement. This can include protecting trade secrets, confidential information, customer lists, or goodwill.
3. Public Policy: Non-compete agreements that are contrary to public policy, such as those that prevent employees from finding work in their field, may not be enforced.
4. Consideration: To be enforceable, non-compete agreements must offer some form of consideration to the employee. This can include a signing bonus, additional compensation, or access to confidential information.
If a non-compete agreement is found to be overly restrictive or contrary to public policy, it may be struck down by the court. However, Ohio courts have generally upheld reasonable non-compete agreements that are narrowly tailored to protect the employer’s legitimate business interests.
Conclusion
Non-compete agreements can be an effective tool for employers to protect their businesses from competition, but their enforceability in Ohio depends on a variety of factors. Employers should carefully consider the scope, duration, and geographic area of their non-compete agreements, and ensure they have a legitimate business interest that justifies the agreement.
Employees, on the other hand, should understand their rights when signing a non-compete agreement and seek legal counsel if they believe the agreement is overly restrictive or contrary to public policy. By understanding the enforceability of non-compete agreements in Ohio, both employers and employees can protect their interests.