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Understanding Restrictive Covenant Agreements

On Behalf of | Sep 20, 2019 | Firm News

When you start a new job, you may be asked to sign a restrictive covenant agreement as a part of your contract. Before you sign, it’s important to understand what you are agreeing to do (or not do)!

What are restrictive covenant agreements?

The restrictive covenant agreements that you can expect to see in a business contract can generally be broken into three categories:

Non-disclosure agreements: This agreement forbids you from sharing the confidential information that you may learn in your position. For instance, it might say that you cannot disclose their trade secrets or processes.

Non-compete agreements: Signing a non-compete agreement means that you promise not to compete with your employer or work for any of their competitors. The agreement usually states the amount of time and geographic area that it spans.

Non-solicitation agreements: This protects your employer from losing employees. It means that if you quit your job with this employer and start your own business, you would not be able to recruit the people you meet while an employee of this company. It would also prevent you from taking their customers.

What Can and Can’t Restrictive Covenant Agreements Do?

The extent to which restrictive covenant agreements can be legally upheld varies by state. In Ohio, restrictive covenant agreements are valid and enforceable as long as they are “reasonable.”

In the past, issues have sometimes come up due to the fact that the term “reasonable” is debatable. The Ohio Supreme Court now has three criteria for what makes a non-compete restriction, in particular, “reasonable.” Ohio considers a restriction reasonable if it does not harm the public, does not place undue hardship on the employee, and does not go beyond what is necessary to protect the employer’s genuine business interest.

What Else Should Workers Know About Restrictive Covenant Agreements?

It’s always important to read any contract thoroughly before signing. It is especially crucial with non-disclosure agreements, non-compete agreements, and non-solicitation agreements. What you agree to will impact what you can and cannot do while employed, as well as for a time afterward.

If you have questions about restrictive covenant agreements, you should consult with a lawyer. Whether you’re concerned about an agreement you’re preparing to sign or believe you’re stuck in an agreement that could be considered unreasonable, we can help. At DeWitt Law, we are dedicated to protecting employees’ rights. We provide free consultations for new clients, so give us a call us today.