What are Non-Compete and Non-Solicitation Agreements?
June 29th, 2022
Non-compete and non-solicitation agreements are restrictive covenants that help companies protect legitimate business interests by restricting a worker's post-employment activities when an employment relationship ends. But to be enforceable, the post-employment restrictions placed on an employee must be reasonable.
Non-Compete Agreements in Ohio
Employers use non-compete agreements to prevent a former employee from competing with the employer after the employment relationship ends. If a former employee violates the terms of the non-compete agreement, the employer can file a lawsuit for breach of contract to enforce the terms of the agreement.
Common terms in a non-compete agreement include:
Confidentiality. The terms of the non-compete agreement are to remain confidential. However, this provision must permit the employee to discuss the terms of the agreement with certain professionals, such as an attorney or an accountant.
Non-disparagement. Both the employer and employee agree to refrain from making negative statements about one another. This prevents the employee from trying to take business away from the former employer and prevents the former employer from making negative comments about a former employee.
Opportunity to Review and Consider. Many non-compete agreements include a clause that the employee has read and understands the agreement. This prevents the employee from claiming they did not read or understand the agreement before signing it.
Severability. If a court finds a specific term of the employment agreement to be invalid, the remainder of the provisions will still be enforceable.
Applicability to Successor and Assigns. If the company is purchased or merges with another business, the terms of the non-compete agreement are still valid.
In most cases, a non-compete agreement is only enforceable for up to one year after the employee-employer relationship has been terminated.
Non-Solicitation Agreements
A non-solicitation agreement is similar to a non-compete agreement in that it restricts a former employee's behavior once the employer-employee relationship has terminated. However, a non-solicitation agreement is generally less restrictive than a non-compete agreement and allows a former employee to continue working in the same industry but prevents them from soliciting a former employer’s customers.
Specifically, a non-solicitation agreement prevents a former employee from soliciting business from a former employer’s customers or soliciting other employees to leave their employment.
Enforcement of a Non-compete or Non-solicitation Agreement
Non-compete and non-solicitation agreements are both enforceable in Ohio, as long as the terms and conditions of the agreement are “reasonable.” When there is a dispute about a non-compete or non-solicitation agreement, courts will evaluate whether the agreement was “reasonable.” The court’s evaluation of the “reasonableness” of the contract will generally include an analysis of the following factors:
The duration of the agreement
The geographic area
The amount of confidential information the employee had access to
Whether the agreement is attempting to eliminate unfair competition or just competition, in general
Whether the benefits to the employer outweigh the hardships to the employee
Whether enforcement of the agreement would interfere with the employe’s ability to find suitable employment
The most common areas of dispute in enforcing a non-compete or non-solicitation agreement are the length of time and geographic scope. Ohio courts will find the contract unenforceable if the agreement is too long or the geographic area is too broad. Additionally, if you work in a niche market or industry and the agreement severely limits the employee’s employment prospects, the agreement may be unenforceable.
Even when courts have found terms of a non-compete or non-solicitation agreement to be unenforceable, the court can amend the agreement to comply with the limitations for a reasonable non-compete or non-solicitation agreement in Ohio.
RKPT: Experienced Business Lawyers
If you are entering into a non-compete or non-solicitation agreement, it is wise to consult with an experienced attorney to ensure the contract will be valid and enforceable. It is also important to understand precisely what types of post-employment conduct will be covered, and that the contract accurately reflects your understanding and expectations.
At RKPT, our lawyers have been serving clients throughout the Midwest and Florida since 1965. We strive to understand your unique needs and concerns and will develop creative, cost-effective ways to solve your problems.
To learn more, contact us today to schedule a confidential consultation to or call (513) 721-3330 to discuss your situation and how we can help.
