Creating noncompete agreements that protect your business

Human resources are a key component to the success of any business. In many situations, in fact, staff control some of the most important information. For businesses that have significant trade secrets known by or accessible to staff, noncompete agreements are a critical form of protection.

After all, these contracts may be the only thing that prevent someone from infiltrating your business, getting ahold of your client list and then moving on to a higher-paid position with one of your competitors. Ohio courts will often uphold noncompete agreements, provided that they meet certain legal criteria.

Understanding the legal requirements for noncompete agreements

Not every noncompete contract signed or executed in Ohio is actually legally binding. Some of them include provisions that the courts would not uphold if an employee challenged them. Creating custom and very precise noncompete agreements for each position or classification of employee can help ensure that they are legally enforceable.

In order to have the courts enforce your noncompete agreement, it should only include restrictions that are necessary to protect your business, not penalize those who seek employment elsewhere. Additionally, those restrictions should not place an undue hardship on your employees or somehow injure the public (such as by preventing whistleblowers from going public).

What constitutes an undue hardship?

The simplest answer is that there is no specific legal definiation. Undue hardship may look like different things to different judges. In lieu of a specific legal formula, consider the implications of the terms of your noncompete agreement on your employees. An agreement that restricts a job with specific competitors or with businesses in your industry within a certain distance, like 100 miles, is likely to get upheld as reasonable.

Similarly, there should be a reasonable amount of time for enforcement of the agreement, often between 12 and 18 months. Locking a skilled, educated professional out of any industry jobs for several years or life would almost certainly result in undue hardship. Not being able to use one’s education or receive a job with pay commensurate to one’s skill could leave professionals unable to support themselves or their families.

Employers can require all staff to sign noncompete agreements

Ohio law allows for companies to require all new hires and existing employees to execute a noncompete agreement as a term of getting hired or retaining a position with the company. The only exception to this is when someone has an existing employment agreement or a contract through a union.

Otherwise, offering a position or allowing an at-will employee to continue working for your company is adequate compensation for signing a noncompete agreement.

Whether you need to take steps to enforce a noncompete agreement or pursue a violation of your intellectual property rights by a former employee, Ohio law often proves to be very employer friendly.

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