What Ohio employers should know about non-compete agreements

Noncompete agreements are often a central part of a company’s overall business strategy. This is especially true in industries that involve specialized services, commercial sales or valuable trade secrets.

When a company invests time and resources into hiring and training employees, noncompetition contracts can help minimize potential losses should a worker later leave the company.

Do Ohio courts enforce non-compete agreements?

Some employers and employees believe that the courts do not enforce non-compete agreements. However, in Ohio, a non-competition contract may be valid and enforceable so long as it contains reasonable restrictions and:

  • Legitimately protects a business’s interests
  • Does not unduly burden the employee
  • Does not cause public harm

When might a non-compete be unenforceable?

While non-competition contracts are legal in Ohio, the courts are careful to ensure that such agreements do not impose undue restrictions on employees. Criteria the courts use to evaluate noncompete fairness include:

  • The duration of the period of noncompetition
  • The scope of the geographic area where a contract prohibits competitive employment
  • The amount of confidential information an employee had access to
  • The likelihood that a noncompete would prevent an employee from finding gainful employment elsewhere

If the courts consider a non-competition contract too broad in terms of time, geography or other restrictions, a judge may either decide the agreement is not enforceable or modify the contract so that it conforms with existing legal standards.

Crafting an effective and enforceable noncompete agreement can be essential for preventing unfair competition as well as potential disputes with employees. With a sound contract, employers may be able to pursue litigation that immediately restricts further work with competitors and shared customers. In some cases, it may also be possible to seek monetary damages for violating the agreement.