Modern employers often include restrictive covenants in employment contracts to protect their organizations. Each new hire and significant internal promotion comes with a risk of damage to an organization.
Employees can misuse what they learn at the company, reveal critical trade secrets or go on to start competing businesses. The addition of a noncompete agreement in an employment contract serves to deter workers from engaging in unfair competition after leaving their positions.
Noncompete agreements have been in the news in the last few years over attempts to prohibit their use in employment contracts. Are noncompete agreements and other restrictive covenants enforceable in Ohio?
Ban attempts have failed
The Federal Trade Commission’s (FTC’s) bid to prohibit noncompete agreements at the federal level suffered a major blow in federal court that prevented the implementation of the policy. As such, noncompete agreements remain legal inclusions in employment contracts in Ohio and many other states.
There are limitations on when noncompete agreements are enforceable. Factors, including the valuable consideration provided for the employee making the concessions and the scope of the agreement, influence the likelihood of the courts enforcing the agreement. Violations such as taking similar positions with competing organizations or starting a directly competing company could lead to litigation to enforce the agreement.
Workers signing employment contracts with noncompete agreements and companies integrating restrictive covenants into their contracts typically need accurate information about current legal practices for optimal protection when starting a new employment relationship. Despite recent attempts to eliminate noncompete agreements in employment contracts, they remain valid contract inclusions that companies can enforce in the Ohio civil courts.