Recoup in your corner for a moment, because you might not be knocked out after all. Specifically, your non-compete clause may not legally be able to knock you (or for employers, your former employees) out of the local job market. Despite the black-and-white appearance of a forbidding non-competition clause in the fine print of your employment contract, the actual enforceability of the clause ultimately boils down to the facts of each individual case.
Indeed, in 1975, the Supreme Court of Ohio stated “that a covenant not to compete which imposes reasonable restrictions upon an employee will be enforced to the extent necessary to protect the employer’s legitimate interests.” Of course, the contrapositive of this is that the clause will not be enforced to the extent that it is not necessary to protect the employer’s legitimate interests.
The Court opinion further explained that a covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if (1) it is no greater than is required for protection of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public. Raimonde v. Van Vlerah, 42 Ohio St.2d 21, 25-26, 325 N.E.2d 544, 547 (1975).
Additionally, the Ohio Supreme Court further explained that if a covenant is deemed unreasonable for these purposes, a court is permitted to modify the terms of the covenant to make its enforcement reasonable. Raimonde, supra.
In order to evaluate whether the covenant meets this criteria, the court will balance nine factors (e.g., the time and geographic scope of the restriction, whether the covenant seeks to eliminate legitimate competition from the marketplace by the former employee or whether it is calculated only to prevent unfair competition, etc.).
The Ninth District Court of Appeals quoted Blake as saying “the objective of a post-employment restrictive covenant is to prevent the competitive use, for a time, of information or relationships which pertain peculiarly to the employer and which the employee acquired in the course of employment, rather than to prevent the competitive use of the unique personal qualities of the employee.” Darrow v. Kolczun 1991 WL 35120, 2 (Ohio App. 9 Dist. 1991); Frank, Seringer & Chaney, Inc. v. Jesko (Dec. 6, 1989), Lorain App. No. 89CA004577, 89CA004613, unreported, quoting Blake, Employee Agreements Not to Compete (1960), 73 Harv.L.Rev. 625, 647. Id. at 276.
There is a great deal more to this area of law than what I’ve cited and discussed here. The important point is that you should be aware that just because an employment agreement contains a non-competition clause doesn’t mean it will be enforceable. If you are dealing with a non-competition clause in your employment contract, you should contact The Ondrejech Law Firm, LLC (330-441-2027), to evaluate your case. I have experience with non-competition agreements and litigation over the same, and I would be happy to help you anyway that I can.
Very truly yours,
Mark S. Ondrejech
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