Helping Employees With Noncompete Disputes
Whether you refer to them as noncompetition contract, covenants not to compete, or noncompete agreements, many employers are now making them a condition of getting a job. Because of the current economic environment, many employees sign the noncompetition contracts, covenants not to compete, or noncompete agreement just to get a job. Many times the employer includes the noncompete agreement in a stack of paperwork that employees will sign on the first day of work without realizing that is what was signed. Some employees don’t realize that covenants not to compete have been included in severance agreements in exchange for a cash payment.
What are competition or noncompete agreements? A noncompetition or noncompete agreement is where agreement your employer will restrict you from engaging in a competing business during your employment, and for a certain period of time after you leave your employment. However, some companies will overreach these contracts and attempt to keep former employees from perfectly legitimate job opportunities. At Spitz, The Employee’s Law Firm, we help employees throughout Ohio fight unfair noncompete contracts.
What Is Allowed In Noncompete Contracts?
Noncompete agreements typically identify a restricted area in which the employee cannot compete based on a designated mile radius from the employer’s place of business or locations where the employee worked. The restricted area can also be identified in the covenant not to compete by specifying specific cities, towns, counties, or states in which the employee cannot compete with the employer. In addition, your employer may ask you to sign a noncompete agreement or a covenant not to compete that bars you from working for a current competitor or client.
As experienced Ohio employment attorneys, we know that noncompete agreements are treated differently from regular contracts under Ohio law. Unlike most contracts for employment, the noncompete agreement has the effect of inhibiting commerce. As such, Ohio courts have created limitations that may allow employees to successfully void or limit the effect of non-completion agreements. Ohio courts look to see if the terms of the no-compete contract are reasonable. For a noncompetition contract to be enforceable, it typically must be:
- necessary to protect certain employer interests
- reasonable in time and scope
- consistent with public interest and
- supported by consideration.
In Raimonde v. Van Vlerah, the Ohio Supreme Court held “that a covenant not to compete which imposes unreasonable restrictions upon an employee will be enforced to the extent necessary to protect the employer’s legitimate interests. A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if it is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public. Courts are empowered to modify or amend employment agreements to achieve such results.”
Factors Typically Considered By The Court
Every instance is fact-specific, and it is always best to consult an Ohio noncompete attorney, but generally, the court will look to these factors:
- Scope of Work: Does the noncompetition agreement limit the employee from doing only particular areas of work or does it more broadly prevent the employee from working in a variety of areas of work?
- Geographic Limitations: Does the noncompete agreement only limit the employees’ opportunities within a 10-mile radius, Cuyahoga County, the entire state of Ohio, or reach farther?
- Duration of Time: Does the duration of the noncompetition contract provide reasonable protection for an employer’s short-term business interests? Or does the noncompete agreement stay in effect for a period of time that exceeds what is reasonably necessary to protect from the loss of the employee?
- Job Restrictions: Does the noncompete agreement provide for employment restrictions exclusive to working for current competitors or soliciting from the employer’s current client lists? Alternatively, do the job restrictions also include companies and functions that are not linked to competitors or current clients?
- Function or Status of Employee: Does the employee serve an essential function within the company seeking the noncompetition contract? Does the employee have access to proprietary information or would clients be likely to follow the employee from the employer?
- Nature of Consideration: Was there separate payment or consideration for the noncompete agreement? Was the consideration nominal or did the employer agree to pay the full three-year salary to prevent the employee from working in the field at all for three years?
Considering all of these factors, for a non-competition contract to be enforceable, it must be narrowly and specifically tailored to meet the needs of the employer, and yet balanced against the employee’s right to earn a living. If a noncompete agreement is found to be overbroad, the court will not toss it out and set the employee free. Instead, Ohio law allows courts to limit the terms of overly broad covenants not to compete by narrowing geographic, time or other restrictions. Lawyers refer to this process as the Court blue-lining or blue-penciling the terms.
Employees that try to secretly violate the noncompetition agreement can find themselves in hot water. Employers that find out that the covenant not to compete has been violated have several available remedies, not of which are good for the employee that is in violation. The company that you previously worked for can file a suit to get money damages paid by you. The former employer can also sue to ask the court for an injunction to prevent you from keep working. Most court will hold a hearing and then grant a temporary injunction at the beginning of the case as long as your former employer can show a contractually enforceable covenant not to compete that has reasonably stated limitations. If court find that you have violated the noncompete contract, you may have to pay money damages and, on top of that, the court may reset the noncompete period to prevent you from competing for even longer.
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Answers To Commonly Asked Questions About Noncompete Agreements
When a company forces their employees into Noncompete agreements, it’s usually not with their workers’ best interests in mind. If you were forced into one of these agreements and have terminated your employment, you probably have a few questions on how these agreements work. Here are a few:
Can I Be Forced To Sign A Noncompetition Agreement? Can A Company Make Signing A No Compete Contract A Condition Of Getting A Job?
Noncompete Contract Lawyers Attorney: Unfortunately, in many states, including Ohio, a prospective employer can make you sign a covenant not to compete or risk not getting the job. While you can always refuse to sign the Noncompetiton contract, doing so could me that you would not get the job, and you would then have no legal recourse against the employer, at least under Ohio law. Many states, such as California, are trending against Noncompetiton agreements. As such, it is best to contact a lawyer to determine what your rights may be in your case.
Is My Noncompete Agreement Enforceable If It Wasn’t Given To Me Before I Started Working? Can I Get Out Of My Noncompete Agreement If My Boss Threatened To Fire Me If I Didn’t Sign It?
Noncompete Contract Lawyers Attorney: It used to be that if an employee was not given the Noncompete agreement before he or she started work, then it was not enforceable because there was a lack of consideration – the offer of employment had already previously been accepted. But, that was then. Back in 2004, the Ohio Supreme Court in Lake Land Empl. Group of Akron, LLC v. Columber, held: “We conclude that forbearance on the part of an at-will employer from discharging an at-will employee serves as consideration to support a Noncompetiton agreement.” As such, the Ohio Supreme Court expressly allows employers to threaten to fire current employees unless they sign new Noncompete contracts regardless of how long those employees have been with the company. Firing employees that refuse to sign the new Noncompetiton contract is not an actionable wrongful termination. And, unfortunately, those Noncompetiton agreements signed while you were employed are enforceable.
Is My Noncompete Agreement Enforceable If I Was Fired For No Reason?
Noncompete Contract Lawyers Attorney: The terms of the contract will control whether or not your Noncompete agreement is enforceable if you are fired. Regrettably, most employers draft the covenants not to compete as broadly as allowed by law, including making sure that you are barred from competing even if you are fired for no reason. Indeed, practically every Noncompetiton agreement that our employment lawyers have reviewed states that it applies even in the case of involuntary termination.
What Is A Reasonable Amount Of Time For My Noncompete Agreement To Be Affective? How Long Can Noncompetiton Contrast Last?
Noncompete Contract Lawyers Attorney: The only clear cut answer is that employers cannot make a Noncompetiton agreement last until the end of time. Other than that, a lot will depend on the circumstances needed to protect the company and the consideration given. While Ohio Courts will typically find one year reasonable, but will not likely enforce a two-year Noncompete. However, if the employee agreed to a Noncompete for three years and received $2 million dollars, the court would likely consider that a reasonable exchange of consideration and the employee would have a tough time arguing that he or she would have a tough time economically without being able to compete. Just remember, it does not hurt employers to overreach on time because the worst that can happen to them is that the court will blue-pencil the agreement and reduce the time to something reasonable.
Can My Prior Employer Prevent Me From Working Anywhere In The United States? What Is A Reasonable Geographic Distance For A Noncompetiton Agreement?
Noncompete Contract Lawyers Attorney: Although you probably know what comes next, the reasonableness of the geographic distance set by a Noncompetiton agreement will depend on the facts and circumstances of each case, including the nature of the company’s business, the job performed by the employee, the location(s) of the work performed by that employee, and the consideration received by the employee. Obviously, the wider and farther reaching geographic distance sought by the employer, the more likely that a court would find it impermissibly broad. To that end, as a general rule, Ohio law does not permit employers to enforce a nationwide or global ban on competing, even for shorter durations.
Can I Get Out Of My Noncompete Agreement If My Boss Did Not Fulfill His Obligation Under The Contract? If My Company Breached My Employment Contract, Can It Still Enforce The Covenant Not To Compete Against Me?
Noncompete Contract Lawyers Attorney: A lot of different factors will go into this answer and will mostly depend on the specifics of your contract or contracts and your alleged breach by your employer. However, generally speaking, some courts will not enforce a Noncompete clause contained in a larger employment contract if the employer previously materially breached that contract. But, the breach must be material to the essential elements of the bargain. In other words, a nominal breach for say, a few days delay in paying a commission, will not stop a court from enforcing a covenant in the contract not to compete. Moreover, to avoid even risking having a breach in an employment agreement to prevent enforcement of a covenant not to compete, most employers are requiring a completely separate contract for the Noncompetiton provisions. As a matter of law, even a material breach of an employment contract cannot be used to void, rescind, or otherwise negate a separate Noncompetiton contract. This is true even if the separate employment and Noncompete contracts were signed just seconds apart.
Is My Covenant Not To Compete Still Enforceable If The Company That I Signed The Noncompetiton Contract With Goes Out Of Business?
Noncompete Contract Lawyers Attorney: As long as the company is truly out of business and did not properly transfer the Noncompete to another entity, you should be able to compete. The rationale behind this answer is that if there is no one left to enforce your Noncompete agreement, no one can stop you. However, this may not be as simple as it sounds because businesses sometimes are not truly gone and there may be language that allows other parties to enforce the covenant not to compete. For that reason, the best course of action is to always consult a top Noncompetiton agreement attorney about your specific circumstances.
Can My Employer Transfer My Noncompete Agreement When It Sells The Business? If I Never Signed A New Noncompetiton Contract After The Company That I Work For Was Sold, Am I Still Bound By The Old One?
Noncompete Contract Lawyers Attorney: Again, a lot of different factors go into shorting out whether a Noncompete contract will carry over to a company that purchased your employer company. One of the primary factors is whether the employment contract with the covenant not to compete or the separate Noncompetiton contract has an express provision allowing it to be assigned upon sale or any other condition. If so, the courts will usually allow the new employer to enforce the no-compete agreement. If there is no express provision allowing assignment, a lot will depend on which state law applies, which may not necessarily be the state in which you worked. Some states mostly allow the transfer to the new employer while others will block it. Ohio, for example, falls in the middle and each court will look to the specific language of the parties to try and determine what the parties intended at the time the contract was entered.
What State Laws Will Govern My No Compete Agreement?
Noncompete Contract Lawyers Attorney: Absent langue in the contract to the contrary, the Noncompetiton agreement will likely be interpreted under the law of the state where the contract was entered. If the no-compete contract was signed by different parties in different states, the court will likely look to where the work was to be performed. However, most Noncompetiton contracts contain what is called a choice of law provision. Such a provision designates which state’s law will be used to interpret the contract. This can be a very important provision as California does not allow covenants not to compete at all while other states will strictly enforce Noncompete provisions. However, a choice of law provision does not require that the lawsuit to enforce the contract has to be brought in that state, i.e. a choice of law provision can require an Ohio court to apply Tennessee law if that is what the Noncompetiton contract calls for. Now, some Noncompete contracts also include what is called a choice of venue provision, which may require the claim to bring in a particular state or county court.
Can My Last Employer Contact My New Boss Regarding My Noncompetiton Agreement? Can My New Boss Fire Me If It Learns About My Noncompete Agreement?
Noncompete Contract Lawyers Attorney: A common tactic that our employment law attorneys often see is for a former employer to call and threaten a new employer with a lawsuit for “tortious interference with a business relationship” based on the new employer hiring an employee despite knowing about the Noncompetiton agreement or keeping that employee once the new employer learns of the covenant not to compete. Unfortunately, if the Noncompetiton agreement is contractually enforceable then a new employer that induced the breach of that agreement can be held liable for damages as a matter of law. Even more unfortunate for the employee, often times the new employer will simply cut bait and fire the new employee to avoid any liability associated with the Noncompetiton agreement. The new employer is well within its legal rights to do so.
Can My Prior Boss Enforce My Noncompetiton Contract Against Me If She Did Not Enforce It Against Other Employees That Left? Can An Employer Only Selectively Enforce Noncompete Agreements?
Noncompete Contract Lawyers Attorney: For the most part, yes. Employers are free to decide on a case by case basis whether to enforce or not enforce covenants not to compete against former employees that you perceive engaged in competition. With that being said, it is very important for employees who are thinking about taking another job or starting a company in violation of a Noncompete should not rely on the fact that they perceive that their employer has not enforced a Noncompete against other employees who have left. Those employees may not have had Noncompetes, may have negotiated a buy out before competing, may not actually be competing, or may have had claims against the company to leverage. Alternatively, the company may have simply just had a different philosophy or decision-maker when it chose not to enforce prior Noncompete contracts. But, most importantly, what the employer did with previous Noncompetiton agreements will not likely affect the enforceability of your Noncompete agreement.
However, employers cannot selectively enforce covenants not to compete for illegal reasons. For example, your boss cannot choose to only enforce Noncompete provisions for a reason that would amount to employment discrimination, such as because of an employee’s race/color, religion, gender/sex, national origin, age, or disability. Likewise, an employer cannot only enforce the covenant not to compete against employees that report unlawful discrimination or engage in whistleblowing.
How Much Will It Cost Me To Fight A Noncompete Dispute? When Should I Hire An Attorney To Review My Noncompetition Agreement?
Noncompete Contract Lawyers Attorney: The earlier that you consult with an attorney regarding your no-compete agreement, the better your position and the less it will likely cost you. This means that the best time to consult an employment lawyer is before you sign the covenant not to compete. This will allow you to understand your rights and possibly allow your lawyer to negotiate for more favorable terms upfront. If you are already in a Noncompete contract, it would be best to contact a top employee’s attorney before you start to compete. This would allow you to understand what the full scope and boundaries of your limitations are, and might allow you to find a way so that you are not violating the agreement. Moreover, it is much easier to negotiate a resolution with your former employer if you are not already violating the covenant not to compete, which gives your former employer even more leverage. Our employees’ attorney will set a flat fee for reviewing your no-compete contract and a reasonable hourly rate to negotiate or litigate your Noncompete dispute.
If you have concerns that sound similar to these, please do not hesitate to reach out to our attorneys. It’s imperative you get specific legal advice based on your own situation.
DISCLAIMER: These answers do not constitute legal advice or guidance.
More Noncompete Questions? Call The Right Attorney™
If you have signed a noncompetition or noncompete agreement, it is best to consult an experienced employment lawyer before switching jobs. However, if you have already switched jobs, or find yourself being threatened or sued by a former employer over a noncompetition contract or noncompete agreement, it is imperative that you call the right attorney today. If you find yourself searching or asking any of the following, your best course of action is to call our noncompete attorneys now:
- My new job is forcing me to sign a noncompetition agreement.
- What should I do if I’m being sued for violating a covenant not to compete from my last job?
- How do I know if my no compete agreement is enforceable?
- I was fired today and my boss said that the company was still going to enforce my covenant not to compete for a full year.
- I’m being sued for violation of a noncompete agreement.
- My prior job showed my new boss my noncompete agreement and I was fired today.
- When I quit my job, my boss said my no compete contract prevents me from working statewide in all of Ohio.
- My last employer is trying to tell me that I have a noncompete agreement, but I don’t remember signing one.
- I can’t earn a living because of a noncompete contract with my last job.
- Can I get out of my noncompetition agreement?
- What should I do if I am being threatened by my old job because I violated my noncompete contract?
- My former employer accusing me of violating a noncompete agreement and threatening to sue me.
- I just got a cease and desist letter from my former employer telling me to quit my new job because I’m in violation of a noncompete agreement.
- I want to start my own business doing the same thing I’m doing for my current employer.
- I signed a noncompete agreement at my last employer and I am having trouble finding a new job that doesn’t violate the agreement.
- I have a noncompete contract, but I’d like to take a job with a competing company.
- Does my new job violate my no-compete agreement from my last employer?
Disputes over noncompetes are very fact-specific and you should consult the best employment law lawyer that you can to see what your rights and risks are, but our employee’s attorneys have provided their top answers to some commonly asked questions here.
If you even think that you might need an employment lawyer, then it would be best to call the right attorney to schedule a consultation. Spitz, The Employee’s Law Firm, and its attorneys are experienced and dedicated to protecting employees’ rights and solving employment disputes.
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