Many employers require their employees to sign noncompete agreements as a condition of employment. These agreements purport to prohibit employees from working for a competitor for a period of time after their employment ends, usually a year.
These agreements are enforceable in most states, with certain restrictions. They have to be reasonable in time and scope, and they cannot impose an undue hardship on the employee, or be injurious to the public interest.
In recent years, however, many states have passed laws to place significant limits on noncompete agreements, and even to outlaw them altogether. In Ohio, Kentucky, and Indiana, however, these agreements are still legal and enforceable in most instances.
Now, noncompete agreements are under attack on a national level. The Federal Trade Commission has proposed a rule that would ban noncompetes nationwide, except in very limited circumstances. The FTC is currently receiving public comment on its proposed rule, and a final rule is expected to be issued early next year.
The National Labor Relations Board has also gotten into the act. This Board, which regulates employer-employee relations and the rights of workers to act in concert with one another, recently issued a ruling banning confidentiality clauses and non-disparagement clauses is in employees severance agreements. Recently, the general counsel (lead attorney) of the NLRB issued a memorandum expressing the view that noncompete agreements violate the legal right of workers to engage in “concerted activity” about their working conditions, because they effectively prevent workers from resigning, or threatening to resign, over unsatisfactory conditions in the workplace. Although the general counsel’s memorandum does not have the force of law, it signifies that the Board may make that ruling in the near future.
As of now, noncompete agreements are still often enforceable in Ohio and surrounding states. That could be changing very soon, however. Stay tuned!