Noncompete Agreement Law
I Was Forced to Sign a Non-Compete Agreement. Am I Really Bound?
In Ohio, non-compete agreements (also called “non-competition agreements” and “covenants against competition”) are binding and legally enforceable to the extent reasonably necessary to protect the legitimate business and competitive interests of the employer.
If a non-compete term is challenged in court, it is possible to get the judge to declare that it either does not apply in a particular situation or must be modified or “equitably reformed” so it will be more in line with the specific business and competitive interests the employer seeks to protect.
Courts often will find that non-compete terms are too broad and will modify or reform the geographic scope or duration of the non-compete agreement. Courts generally will not alter any definition of what constitutes “competition” unless the definition in the non-compete agreement or covenant itself is too broad, vague, or ambiguous or it would be unconscionable or unreasonably restrictive on the former employee’s ability to make a living to apply the literal definition of “competition” included in the non-compete agreement or covenant.
I frequently receive calls from individuals when it is too late to address non-compete terms. The best time to consult an attorney over a non-compete agreement or covenant is before you sign it. Reasonable negotiation over such a term is possible, particularly for executives, senior-level managers, sales and marketing personnel, finance executives, and technical personnel and engineers. This negotiation usually leads to an agreement over terms governing access, use, and ownership of trade secrets, inventions, intellectual property, and the obligations to maintain the confidentiality of information the employer considers the most sensitive.
I also receive several calls each year from outraged executives and senior-level managers who want to know why their current or former employers believe they have the right to enforce a non-compete agreement or covenant even though the employer never mentioned a non-compete term during pre-employment negotiations or in the offer letter.
It used to be in Ohio that a non-competition agreement or covenant against competition could not be enforced unless it was supported by a reciprocal promise made by the employer. Employers used to have to match the non-compete term with something of value given to the employee, such as additional compensation, a raise, bonus, eligibility for an incentive compensation plan, or additional vacation leave—unless the non-compete term was included in the original employment offer.
The Ohio Supreme Court has held that when an employment relationship is “at-will,” as most employment relationships in Ohio are, each day offers a new opportunity for either party to terminate the relationship or for the employer to propose a modification of the relationship, with or without cause or notice. The Ohio Supreme Court reasons that the offer of “continued employment” is all the value the employer must give in suddenly insisting on the execution of a non-compete agreement or covenant where none existed before.
If you were enticed to relocate yourself and your family to embark on a new career or job by terms that did not originally call for you to sign a non-compete agreement or covenant, be aware that you and your family can have your lives turned upside down by an employer who decides to place onerous terms in front of you without notice or negotiation and simply insists on a take-it-or-leave-it basis that you sign it or exercise your own right as an “at-will” employee to quit your job on the spot at the risk of becoming ineligible for unemployment compensation benefits.
Consult an employee rights lawyer as soon as your employer first brings up the idea of having you sign a non-compete agreement. If you wait until you want to leave your job for a better offer from a competitor, it might be too late. Contact us if you need an employment attorney in the Cleveland or Akron areas to help you with a non-competition agreement.