Ohio Non-Compete Law

Third, in Lykins Oil Co.c. Corbin, an Ohio court of appeals, has considered when courts can change injunctions that enforce non-compete obligations. [14] In this case, a wholesaler and distributor of gasoline, diesel fuel and other petroleum products entered into a non-compete obligation with a commercial agent. [15] After Lykins Oil terminated this relationship, the sales representative joined a competitor. [16] The company filed a lawsuit to enforce the agreement and the parties entered into an agreed injunction. [17] Pennsylvania: House Bill 1938, Pennsylvania Freedom to Work Act, would prohibit the use of non-compete obligations and invalidate jurisdictional and choice of law agreements with Pennsylvania-based employees. Massachusetts: House Bill 4419 (Section 24L, Chapter 149 of the General Statutes) was repealed on October 10, 4419. August 2018 and came into force on October 1, 2018; The non-competition clause applies to both employees and independent contractors and generally prohibits non-compete obligations unless they are, among other things, signed in writing, by both the employer and the employee, state that the employee has the right to consult a lawyer before signing, and have a term of one year or less. The employer must also announce the agreement, and if the agreement is signed during employment, it must be supported by independent considerations beyond the continuation of employment. In addition, the law prohibits non-compete obligations with employees who are not exempt under the Fair Labour Standards Act and prohibits the application of the law if the employee has been dismissed or dismissed without giving reasons.

Non-compete obligations are enforceable in Ohio. However, there are laws that state that a non-compete obligation must be “reasonable” to protect the employee. A word of warning with severance agreements: If you enter into a severance agreement with an employee who had signed a non-compete obligation at the time or during employment, make sure you do not inadvertently cancel the previously entered into non-compete obligation. A seeding agreement that does not contain its own non-compete obligation or that does not expressly contain a previously concluded non-compete obligation (as contained in the original employment contract) by reference and which also stipulates that it replaces all previous agreements has declared the previously filed non-compete obligation null and void and unenforceable. Bortz v. Freedom USA, Summit C.P. No. 2017 06 2566, 2017 Ohio Misc.

LEXIS 8036, at *4-5 (December 6, 2017). Non-denigration. A non-disparagement provision prohibits the parties from harming each other. Non-disparaging provisions seem to go hand in hand with a non-compete obligation. Finally, the overarching objective of the agreement is to protect a company`s competitive advantage. What good is it if the employee refrains from working for a competitor if she speaks badly about the company throughout the city? Of course, other laws are available to protect a company`s reputation and business interests (for example. B, defamation, unauthorized interference, etc.); However, a non-disparagement clause is an easy way to remind the employee (and employer) to maintain professionalism despite the end of the employment relationship and to ensure the protection of the company`s reputation and competitive advantage. Non-compete obligations with contract workers are much more difficult to enforce than agreements with employees. Indeed, as an independent contractor, you need several contracts, often in the same industry, to earn a living. It is your right to work with whomever you want. Therefore, a non-compete obligation in Ohio is easier to challenge.

Some of the most common factors that cause a non-compete obligation to fail due to a lack of relevance are: After working for your employer for a while, you may be considering quitting to pursue other opportunities. Could your non-compete obligation really affect your ability to work where you want? Are you able to challenge the applicability of the non-compete clause and the non-compete clause in Ohio? An employer is not obliged to do anything in exchange for signing a non-competition clause. All you have to do is provide a job without a fixed warranty. Although two States may use the same method to determine the enforceability of a non-compete obligation, this does not mean that the laws governing certain issues of applicability are also the same. For example, Ohio law recognizes that “maintaining employment” of an employee at will is sufficient consideration to enter into a non-compete agreement with that employee, even after that employee has begun working for the company. B.J. Alan Co., above, 2014-Ohio-2938, ¶ 30 However, Pennsylvania`s law is different because Pennsylvania has recognized that “the mere continuation of the employment relationship at the time of the conclusion of the restrictive pact is not sufficient to serve in exchange for the new covenant, even if it is an unlimited relationship that can be terminated by both parties.” Socko v. Mid-Atlantic Sys. by CPA, Inc., 633 Pa. 555, 570-71 (Pa. 2015) (emphasis added).

Using the example above, it`s important to consider whether the laws of multiple states can be affected by your non-compete obligation. Whether an injunction is appropriate to enforce a non-compete obligation is, by its very nature, specific to the facts; However, some recent cases in Ohio illustrate how the courts apply these factors in real-world controversies. New Hampshire: Senate Bill 423 would ban non-compete clauses involving low-wage workers (earning less than $15 an hour or the federal minimum wage). This bill seems to have been killed. Applicable Law in New Hampshire, NH Rev. Stat. § 275.70, requires disclosure of the non-compete obligation to the employee before the employee accepts an offer of employment. Non-compete obligations (also known as restrictive covenants, restrictive covenants, non-competitive or non-competition) are contracts that prohibit certain activities or professions after an employee has left a company. You can apply restrictions based on various criteria such as geography (p.B, no competitive activity within five miles of the employer`s establishment) or customers (p.B. no solicitation from the employer with whom the former employee had a business relationship during his or her work for the employer). Penalty.

Indemnification clauses are not necessarily a common practice, but such provisions are worth noting here because they were not directly removed in Ohio as part of a breach of the duty not to compete. Kidney & Hypertension Specialists Chillicothe v. Adena Health Sys., Franklin C.P. No. 12CVH-15862, 2014 Ohio Misc. LEXIS 9317, at *18 (May 6, 2014) (Dismissed a summary judgment requesting that a lump sum damages provision in a non-compete obligation not be enforced for lack of insufficiency). A lump sum damages clause provides that in the event of a material breach of contract, the infringing party will be liable for a certain amount on demand in addition to the actual damages and the right to an injunction. Be careful with these types of provisions – you may be on the receiving side if the provision is mutually applicable to the parties. Careful consideration should be given to the desirability of including a lump-sum compensation clause. Although many believe that non-compete obligations are unenforceable, the truth is that it can depend on many different factors. Raimonde v.

Van Vlerah, which was heard by the Ohio Supreme Court, established criteria in 1975 to be used to determine the legality of a non-compete obligation. Although there has not been much movement since then, the factors described in this case remain valid today. As with the duration of a non-compete agreement, Ohio courts will focus on the specific facts of each case when deciding whether to limit the geographic scope. Be sure to do the same when deciding which geographic scope is appropriate for your agreement and consult a qualified lawyer to draft your non-compete obligation. In our practice, we encounter many employees who are forced to sign non-compete obligations, even if they are non-managerial and hourly employees with limited access (if any) to employer strategies, business plans and other confidential information. Typically, these employees do not have trade secrets that make the restrictions of a non-compete obligation valid and enforceable. They often developed industry skills and knowledge that preceded the time they worked for their last employer. And they usually find the restrictions on employment they may seek so painful that they are essentially excluded from the only commercial market they have ever known, making their skills virtually worthless to any consecutive potential employer.

All of the above circumstances tend to make successful performance of non-compete obligations less likely. In Willis Ohio Inc. v. Turney, P.C. No. 11 cv 15804, 2014 Ohio Misc. LEXIS 3935, (May 9, 2014), the court ruled that a non-compete obligation preventing an employee of an insurance agent from working with his former clients for two years was appropriate. Id. at *12.

The court held that the agreement did not impose undue hardship on the employee insurance agent because he had not been prevented from earning a living or using his skills in the profession of his choice because he could work for a competitor for the two-year period. Id. to *11. The court also held that the agreement was not prejudicial to the public because restricting the employee`s former customers from not cooperating with the insurance agent`s employee for the two-year period was not sufficient to render the agreement inappropriate ..