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I Have A Non-Compete Agreement: What State Law Applies?

On Behalf of | Nov 21, 2013 | non competition disputes |

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Question: what law applies if an Ohio company, with an Ohio choice of law contract, sues in an Ohio court to enforce a non-compete agreement?

Non-Competion Employemnt Lawyer: It depends on who you’re suing and where the parties are.

As one recent case demonstrates, when a non-compete dispute involves parties in different states or ties to different states, it pays to know each state’s non-compete laws. State laws governing non-competes vary a great deal. Some states, such as California, have laws that render pretty much any non-compete agreement unenforceable while others are not nearly as adverse to the idea. In the case of Lifestyle Improvement Centers, LLC v. East Bay Health, LLC, the defendant company used California’s strong stance against non-compete agreements to thwart the enforcement of an Ohio contract with an Ohio choice of law provision.

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To settle the dispute, the court utilized Ohio’s conflicts doctrine, which provides a method for determining which law should rule the day when each of the states involved in a dispute have different laws that would result in different outcomes if applied. The doctrine provides in part that the parties’ contractual choice of law provision will be enforced except where:

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or

(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue ….

Although Ohio enforces non-compete agreements based on their overall reasonableness, California has made a public policy decision against enforcing non-compete agreements regardless of whether or not the agreement is reasonable. Thus, the defendants argued that the court should find that enforcing the non-compete under Ohio law would be contrary to the fundamental policy of California. The defendants further argued that California had the greater interest in the matter since the competing business were actually located in California. Much to the chagrin of the plaintiff Ohio company, the federal court agreed.

If you have questions about the enforceability of your non-compete, call an experienced employment attorney who can help you determine your rights today.

If you have found yourself asking, “is my non-compete agreement enforceable?” — or even think that you might need an employment lawyer, then it would be best to call the right attorney to schedule a free and confidential consultation at 866-797-6040 to discuss your non-competition agreement. The Spitz Law Firm and its attorneys are experienced and dedicated to protecting employees’ rights and solving employment disputes over these type of contractual no-compete agreement.

Disclaimer:

The materials available at the top of this page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are trying to figure out “is my non-competition agreement enforceable,” or “how do I get out of a non-compete agreement,” it would be best for to contact an Ohio attorney to obtain advice with respect to your particular employment law issue or problem. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.