Non-compete agreements are often entered into as a condition of employment to protect trade secrets and intellectual property. Under the traditional analysis of most states, non-compete agreements are valid and enforceable if the agreement:
- Is supported by consideration
- Contains restrictions no greater than necessary to protect the employer
- Does not impose an unreasonable hardship on the employee
- Contains reasonable temporal and geographic restrictions
On May 30, 2023, the National Labor Relations Board issued a memo indicating that “the proffer, maintenance, and enforcement” of non-compete provisions violates Section 8(a)(1) of the National Labor Relations Act (NLRA), except in very limited circumstances. That memo instructs regional offices to deem most non-compete provisions unlawful. Adoption of new rules are anticipated in April, 2024, and will certainly face legal challenges.
Until then, it is important for employers to understand that in Ohio, all non-competes are subject to court interpretation (state and federal), and courts are more likely to enforce these agreements if there is a tangible taking and unauthorized use of company data. There are no Ohio statutory provisions governing non-competes. Employers should examine the following with legal counsel:
- Current language in existing non-competes
- Review reason behind the non-compete and enforceability
- What employees are required to sign non-competes
- Does the company have liability insurance coverage for these claims (D&O)
- If non-compete is violated, what is the tangible harm
- Has remote work expanded unnecessary employee access to more company data
For help assessing your current or proposed non-compete agreements, call Elise Auvil Hara in our office at 216-374-3713.
