Creating an enforceable non-compete agreement

On Behalf of | Jan 27, 2023 | Business And Commercial Law

Non-compete agreements are standard for many businesses and industries to protect trade secrets and intellectual property. In Ohio, a non-compete agreement is only enforceable if it meets the state’s requirements.

Ohio law states that the applicable term cannot exceed one year after the termination of employment.

There must be some legal consideration

A non-compete agreement must include legal consideration for the party committing to the contract. In most cases, the offer of employment and the compensation that comes with that employment is sufficient consideration.

There must be good faith

Any non-compete agreement should reflect good faith on the part of both parties. Each party in the contract should act in support of the contract and in accordance with those terms with no deliberate actions to impede the agreement.

The agreement must be necessary to protect the business

A business in a competitive industry with trade secrets may need a non-compete agreement to protect its position in the industry.

The applicable area must be geographically reasonable

Every non-compete agreement has a defined geographic area for employment restriction. That geographic area must reflect a reasonable area for the company’s competitors and not one that is irrationally large enough to prevent any alternative employment.

The employee should play a specialized role

Employers cannot require administrative employees with no access to proprietary information to sign a non-compete agreement. Only employees in specialized roles and positions with access to regulated information.

Recognizing the fundamentals of an enforceable non-compete agreement is important. Protect your company’s right to enforce your contracts by following the state’s regulations.