You have been working for your current employer for years and, as a requirement for employment, your employer had you sign a non-compete agreement that prohibits you from working for a competitor of your current employer, either with a different company or on your own, for a designated period of time after you leave your current employer. Now, you want to leave your current employer or start your own business and a question comes to mind: Is the non-compete agreement I signed enforceable?
Non-Compete Agreements are Valid in Ohio
Ohio recognizes the use of non-compete agreements. These agreements are a valid way for employers to protect themselves from employees taking what they have learned from them, particularly customer contacts, trade secrets and proprietary business information, and using that against the employer. With a non-compete agreement, the employer may be able to receive money damages and an injunction prohibiting the former employee from using the information learned.
However, non-compete agreements are not always enforceable. These agreements will only be enforced if they are “reasonable.”
What is Reasonable?
Reasonableness is a hard term to define because it is subjective. What is reasonable to one person is unreasonable to another. However, the Ohio Supreme Court in Raimonde v. Van Vlerah addressed this issue. In Raimonde, the Court established a three-part test to determine whether a non-compete agreement is reasonable.
A non-compete agreement will be deemed reasonable if it satisfies the following:
- The restriction is no greater than what is required for the protection of the employer’s legitimate business interest;
- The restriction does not impose undue hardship on the employee; and
- The restriction is not injurious to the public.
In addition to laying out the preceding requirements, the Court in Raimonde set out a list of factors that may be used to determine whether a non-compete agreement satisfies those conditions. The factors include:
- The absence or presence of limitations as to time and space;
- Whether the employee represents the sole contact with the customer;
- Whether the employee is possessed with confidential information or trade secrets;
- Whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition;
- Whether the covenant seeks to stifle the inherent skill and experience of the employee;
- Whether the benefit to the employer is disproportional to the detriment to the employee;
- Whether the covenant operates as a bar to the employee’s sole means of support;
- Whether the employee’s talent which the employer seeks to suppress was actually developed during the period of employment; and
- Whether the forbidden employment is merely incidental to the main employment.
Whether your non-compete agreement is reasonable and, thus, enforceable will depend on the circumstances of your employment and the specific language of the agreement. However, just because a non-compete agreement is unreasonable does not mean that it is unenforceable.
Even if a non-compete agreement is found to be unreasonable as written, a court is permitted to modify or amend the agreement so that it satisfies the three-part test set forth above and becomes reasonable.
Columbus and Delaware, Ohio Small Business Attorney
If you wish to create a non-compete agreement to protect your small business in Columbus or Delaware, Ohio, contact Johnson Legal, LLC and speak with an experienced small business lawyer. Attorney David Johnson of Johnson Legal, LLC will discuss your small business needs. Call (614) 987-0192 or send an email to schedule a consultation.