Business owners everywhere are anxious about protecting their interests – and their market. The last thing that most companies can afford is for a former highly placed employee to strike out on their own in the same industry and steal away their customers.
Can you stop them? Many people (including business owners) think that non-compete agreements are unenforceable. Is this true?
As long as the agreement is reasonable, it can be enforced
Non-compete agreements developed a bad reputation because some overly aggressive companies were using them to overreach. They had restrictive covenants woven into their employment contracts that basically deprived their former employees of any chance at a livelihood in their field if they ever tried to leave.
Ohio does, however, permit a reasonable non-compete agreement. Granted, how exactly the court may define “reasonable” could be both subjective and fact-specific. There are a few rules that need to be followed:
- The agreement cannot cause injury to the public.
- The agreement cannot impose an undue hardship on the employee in question.
- The agreement cannot be more than what is necessary to protect your company’s legitimate business interests.
In other words, you can’t use a non-compete agreement to protect a monopoly, since that would injure the public. You also can’t bar a former employee from working anywhere in the industry, even if they plan to do so half a continent away where they’re no threat to your business. You also couldn’t enforce a five-year non-compete agreement to protect your technological secrets when those will likely be either public or outdated within a year.
Understanding your rights regarding a non-compete agreement can be tough, especially in the ever-evolving legal landscape. If you’re concerned that a former employee isn’t abiding by their non-compete agreement, it may be wise to seek legal guidance.