Noncompete Contract Lawyers
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: