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Lay-off and 2 year non-compete agreement

I work for a large chemical company and signed a non-compete clause which forbids me from working for ANY other company in any business in which my current company does business/sells product for 2 years.

Is this enforceable if I am laid off ? Also, isn't 2 years length unreasonable (and maybe unenforceable). This would effectively keep me at my current employer since I could not earn a comparable living in the area of expertise in which I have worked for 20 years. Thank you !

1 answer  |  asked Feb 20, 2004 2:24 PM [EST] in Employment Law  |  applies to Ohio

Unlock Non-Compete Agreements: Keys to Escape

Answers (1)

Ann Lugbill
Non-compete agreement

Assuming that this is a binding agreement upon your, this agreement may likely be found NOT to be fully enforceable if you are laid off or fired. However, parts of it might remain enforceable, depending on a variety of unique factual circumstances (like what was your job, what is the new job, where the two jobs are located, etc.). Below are some excerpts from some Ohio non-compete cases to give you some idea of what types of factors courts consider. You may want to read some of these to get a better idea of the considerations that the courts make, as they tend to be practical in nature. ultimately, you would need a lawyer with knowledge in this area to more fully explain your rights and obligations.

"[T]he law does not favor restrictive covenants * * * this measure of disfavor is especially acute concerning restrictive covenants among physicians, which affect the public interest to a much greater degree." (Busch v. Premier Integrated Med. Assocs., Ltd., 2003 Ohio App. LEXIS 4255 (Montgomery Cty. App., September 5, 2003)(citing Ohio Urology, Inc. v. Poll (1991), 72 Ohio App.3d 446, 452-453, 594 N.E.2d 1027).

We have held that factors to be considered in determining reasonableness of the [non-compete] restrictions a covenant imposes include "(1) the existence of time and geographic limitations; (2) whether the employee represents the sole contact with the customer; (3) whether the employee possesses confidential information or trade secrets; (4) whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition; (5) whether the covenant seeks to stifle the inherent skill and experience of the employee; (6) whether the benefit to the employer is disproportional to the detriment to the employee; (7) whether the covenant operates as a bar to the employee's sole means of support; (8) whether the employee's talent which the employer seeks to restrict was actually developed during the period of employment; and (9) whether the forbidden employment is merely incidental to the main employment." (Busch v. Premier Integrated Med. Assocs., Ltd., 2003 Ohio App. LEXIS 4255 (Montgomery Cty. App., September 5, 2003)(citing Pratt v. Grunenwald (June 29, 1994) Montgomery App. No. 14160, 1994 Ohio App. LEXIS 2805 (citing Raimonde v. Van Vlerah, 42 Ohio St.2d 21, 325 N.E.2d 544 (1975)). See also Rogers v. Runfola & Associates, Inc., 57 Ohio St.3d 5, 565 N.E.2d 540 (1991).

Among the factors identified as relevant to this inquiry is "whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition." Id., at p. 25, quoting Extine v. Williamson Midwest (1964), 176 Ohio St. 403, 200 N.E.2d 297.

The non-compete requirement covers sixteen states and three years. We find that a question of material fact exists as to whether the extent of the non-compete is unduly burdensome to Granzier beyond what is needed to protect Cabbage. Granzier v. Cabbage, Inc., 2003 Ohio App. LEXIS 3236* 10 (Cuyahoga Cty. App., July 3, 2003).

posted by Ann Lugbill  |  Feb 20, 2004 3:10 PM [EST]