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Can a non-compete agreement keep someone from getting a new job?

On Behalf of | Dec 21, 2023 | Employment Law

Workers typically sign employment contracts when they accept new positions. The excitement about a fresh opportunity often leads to a worker rushing through the contract negotiation process with little concern for what the paperwork might mean for their future.

Then, when circumstances change in a few years, they may begin to worry about what the contract includes. Some employers in Ohio still sometimes require that certain workers sign non-compete agreements. These restrictive covenants prohibit seeking employment with direct competitors or starting a competing business.

Does a non-compete agreement mean that an Ohio worker has to give up their career in a particular industry or turn down lucrative job offers?

Contract terms determine what limits someone faces

As a general rule, the Ohio civil courts only enforce contracts that are valid and reasonable. Restrictive covenants in employment contracts tend to receive significant scrutiny during contract litigation. Non-compete agreements do not always hold up under scrutiny, particularly when employers include overly broad terms. However, the most important element in a non-compete agreement is that the company must show that the restrictions on the worker are necessary to protect its business interests.

Proving that generally requires showing that a worker had access to information, such as client lists or other trade secrets, that could undermine the company’s competitive edge. The new job opportunity typically needs to involve direct competition based on the grounds for restricting the worker’s ability to compete. The courts also have to agree that the contract is valid based on the terms that it includes. A worker should have received something of valuable consideration for making economic concessions. Additionally, the company should have limited the duration of the agreement and the location where it applies.

A worker who is hoping to pursue a new employment opportunity should review their contract carefully to see if their new employment arrangements might violate the terms of the contract. While there are signs that federal authorities may soon act to limit non-compete agreements or ban them entirely, for the time being, they can potentially affect someone’s economic opportunities in Ohio.

Ultimately, reviewing an employment contract with the assistance of an attorney is an important first step for anyone who is worried about a restrictive covenant while seeking a new job.