Employee Non-Compete Agreement and Enforceability Memo — Ohio

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OHIO Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

PART A — ENFORCEABILITY MEMO

A.1 Common-Law Framework

Ohio has no general non-compete statute. Enforceability is governed by common law principles articulated in Raimonde v. Van Vlerah, 42 Ohio St. 2d 21, 325 N.E.2d 544 (1975), and refined in Procter & Gamble Co. v. Stoneham, 140 Ohio App. 3d 260 (1st Dist. 2000), and Lake Land Emp. Group of Akron, LLC v. Columber, 101 Ohio St. 3d 242, 2004-Ohio-786.

A.2 Raimonde Three-Part Test

A non-competition covenant is enforceable only to the extent it:

1. Is no greater than required for the protection of the employer's legitimate interests;
2. Does not impose undue hardship on the employee; and
3. Is not injurious to the public.

Raimonde, 42 Ohio St. 2d at 25–26.

A.3 Raimonde Reasonableness Factors

Ohio courts apply a multi-factor totality test:

Raimonde, 42 Ohio St. 2d at 25.

A.4 Consideration — Lake Land v. Columber

A 4-3 Ohio Supreme Court majority held in Lake Land, 101 Ohio St. 3d 242, 2004-Ohio-786, that continued at-will employment is adequate consideration to support a non-compete agreement entered into mid-employment. However, dissenting justices urged a contrary rule, and federal district courts in Ohio occasionally require additional consideration for at-will employees. Best practice:

A.5 Modification — Raimonde vs. Kross

Raimonde rejected the mechanical "blue-pencil" doctrine (which permitted striking divisible terms only) and authorized courts to modify overbroad covenants to make them reasonable. For decades, Ohio courts routinely modified covenants rather than voiding them.

However, Kross Acquisition Co., LLC v. Groundworks Ohio, LLC, 2024-Ohio-590 (1st Dist.) held that modification is discretionary, not mandatory. The First District invalidated a two-year Ohio/Kentucky covenant entirely where the geographic and temporal scope substantially exceeded the employer's actual market, citing the trial court's refusal to "rewrite" a covenant with so many overbroad terms. Other appellate districts (8th, 10th, 11th) have signaled similar reluctance to rewrite poorly drafted covenants.

Practical takeaway: Draft conservatively — do not rely on judicial reformation to save an overbroad covenant.

A.6 Inevitable-Disclosure Doctrine

Procter & Gamble Co. v. Stoneham, 140 Ohio App. 3d 260, 274 (1st Dist. 2000), recognized the inevitable-disclosure doctrine in Ohio. An employer may enjoin a former employee from accepting new employment, even absent a non-compete, where the new position would inevitably result in the use or disclosure of trade secrets. The doctrine supplements (but does not replace) a non-compete and is enforced under the Ohio Uniform Trade Secrets Act, R.C. 1333.61 et seq.

A.7 Industry-Specific Considerations

• Lawyers: Ohio Prof. Cond. R. 5.6 prohibits employment agreements that restrict an attorney's right to practice after termination, except retirement agreements.
• Physicians: Strongly scrutinized. Courts assess public interest in patient access, the physician's specialty, and the availability of substitute providers (Ohio Urology, Inc. v. Poll, 72 Ohio App. 3d 446 (10th Dist. 1991)).
• Broadcasters: No specific Ohio statute, but reasonableness scrutiny applies.
• Public employees: Constitutional and statutory issues may apply.

A.8 Geographic Scope — Practical Benchmarks

Ohio courts have enforced:

A.9 Temporal Benchmarks

A.10 Remedies

• Injunctive relief — primary employer remedy, available with showing of (1) likelihood of success; (2) irreparable harm; (3) balance of equities; (4) public interest.
• Damages — actual losses, including lost profits and consequential damages.
• Liquidated damages — enforceable if not a penalty (Lake Ridge Academy v. Carney, 66 Ohio St. 3d 376 (1993)).
• Trade-secret remedies under R.C. 1333.63 — actual damages + unjust enrichment + exemplary damages up to 2× compensatory + attorney's fees for willful misappropriation.

A.11 Choice of Law and Venue

Ohio courts generally honor reasonable choice-of-law and venue clauses unless application of the chosen law violates Ohio public policy. Schulke Radio Productions, Ltd. v. Midwestern Broadcasting Co., 6 Ohio St. 3d 436 (1983).

A.12 Recent Developments

• Ohio SB 11 (and predecessor bills): Periodic legislative proposals to ban non-competes for "workers" defined broadly. As of May 2026, no general ban has been enacted. Monitor.
• FTC Non-Compete Rule: Set aside in Ryan, LLC v. FTC (N.D. Tex. Aug. 20, 2024); appeal pending.
• Federal-court split on Ohio consideration: federal courts occasionally distinguish Lake Land where new agreement coincides with a material job change.

PART B — NON-COMPETE AGREEMENT

B.1 Caption

Effective Date: [__/__/____]

B.2 Recitals

WHEREAS, the Company is engaged in [DESCRIBE BUSINESS] within Ohio and other jurisdictions and has invested substantial resources in developing confidential information, customer relationships, goodwill, and specialized training;

WHEREAS, in connection with Employee's [☐ initial employment / ☐ promotion / ☐ access to confidential information / ☐ receipt of specified consideration described below], the Company will provide Employee with access to confidential information, customer relationships, and specialized training that the Company has a legitimate interest in protecting;

WHEREAS, the parties intend that this Agreement be construed and enforced under Ohio law in accordance with Raimonde v. Van Vlerah, 42 Ohio St. 2d 21 (1975), and its progeny;

NOW, THEREFORE, in consideration of the mutual covenants below and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows.

B.3 Definitions

"Business of the Company" means [DESCRIBE WITH SPECIFICITY].

"Competing Business" means any person or entity that engages in the Business of the Company within the Restricted Territory.

"Confidential Information" means non-public information of the Company including [LIST: customer lists, pricing strategies, formulas, source code, financial data, business plans], and includes "trade secrets" as defined in R.C. 1333.61(D).

"Customer" means any person or entity to which the Company sold, marketed, or provided products or services during the [12 / 18 / 24] months preceding Employee's termination, and any prospective customer with whom Employee had material contact during that period.

"Restricted Period" means [6 / 12 / 18] months following the date Employee's employment terminates.

"Restricted Territory" means [DEFINE NARROWLY — e.g., "the counties in Ohio in which Employee performed services or had material customer contact during the last 24 months of employment, specifically including [LIST]"].

B.4 Acknowledgments

Employee acknowledges that:

(a) Employee has had a reasonable opportunity to review this Agreement and to consult with counsel of Employee's choice.

(b) Employee will receive Confidential Information, customer relationships, and specialized training that the Company has a legitimate business interest in protecting.

(c) The restrictions in this Agreement are reasonable in scope, duration, and geography in light of Employee's role, the Company's business, and the consideration provided.

(d) The restrictions will not bar Employee's sole means of support and will not stifle Employee's inherent skill and general knowledge.

B.5 Non-Compete

During the Restricted Period, Employee shall not, directly or indirectly, within the Restricted Territory:

(a) own, manage, operate, control, be employed by, consult for, or provide services to any Competing Business in a capacity in which Employee would (i) perform the same or substantially similar duties as Employee performed for the Company, or (ii) use or disclose Confidential Information; or

(b) engage in any business activity competitive with the Business of the Company in the capacity described in subsection (a).

Carve-out: Passive ownership of less than 2% of a publicly traded entity is permitted.

B.6 Non-Solicitation of Customers

During the Restricted Period, Employee shall not, directly or indirectly, solicit, divert, or accept business from any Customer (i) with whom Employee had material contact during the last 24 months of employment, or (ii) about whom Employee obtained Confidential Information, for the purpose of providing products or services competitive with the Business of the Company.

B.7 Non-Solicitation of Employees

During the Restricted Period, Employee shall not, directly or indirectly, solicit for employment, hire, or attempt to hire any person employed by the Company during the last 12 months of Employee's employment, other than through a general public advertisement not targeted at Company employees.

B.8 Consideration

In consideration for Employee's covenants, the Company shall provide (check all that apply):

☐ Initial employment with the Company effective [__/__/____]
☐ Sign-on bonus of $[____________]
☐ Promotion to [POSITION] effective [__/__/____]
☐ Salary increase of $[____________] effective [__/__/____]
☐ Equity grant of [___] [shares/RSUs/units] under the Company's [PLAN NAME]
☐ Severance commitment of [___] months base salary payable upon termination without Cause
☐ Continued at-will employment (per Lake Land Emp. Group of Akron, LLC v. Columber, 101 Ohio St. 3d 242, 2004-Ohio-786)
☐ Other: [____________]

Employee acknowledges that the foregoing constitutes adequate and valuable consideration for this Agreement under Ohio law.

B.9 Garden Leave (Optional)

☐ Notice Period. Employee shall provide [___] days' written notice of resignation. The Company may, in its discretion, place Employee on paid garden leave during the notice period, during which Employee remains an employee, continues to receive base salary and benefits, and shall not work for any other entity. Time on garden leave shall reduce the Restricted Period day-for-day.

B.10 Remedies

(a) Injunctive Relief. Employee acknowledges that breach would cause irreparable harm and that the Company is entitled to seek temporary, preliminary, and permanent injunctive relief, including without limitation under R.C. 1333.62 (Ohio Uniform Trade Secrets Act).

(b) Damages. The Company may seek monetary damages, including lost profits, disgorgement, and consequential damages.

(c) Tolling. The Restricted Period shall be tolled during any period of breach.

(d) Trade Secrets. Nothing in this Agreement limits the Company's rights or Employee's obligations under the Ohio Uniform Trade Secrets Act, R.C. 1333.61–1333.69.

(e) Attorney's Fees. In any action to enforce this Agreement, the prevailing party shall recover reasonable attorney's fees and costs.

B.11 Reformation / Blue-Pencil

If any portion of this Agreement is held to be unreasonable or unenforceable, the parties expressly request that the court modify the unenforceable provision to the minimum extent necessary to render it enforceable under Raimonde v. Van Vlerah, 42 Ohio St. 2d 21 (1975). The parties acknowledge that under Kross Acquisition Co., LLC v. Groundworks Ohio, LLC, 2024-Ohio-590 (1st Dist.), modification is discretionary, and they nevertheless request such modification.

B.12 Choice of Law and Venue

This Agreement is governed by the laws of the State of Ohio without regard to conflict-of-laws principles. The parties consent to exclusive venue in the Court of Common Pleas of [____________] County, Ohio, or the U.S. District Court for the [Northern/Southern] District of Ohio.

B.13 Severability and Entire Agreement

The provisions of this Agreement are severable. This Agreement, together with [LIST RELATED AGREEMENTS], constitutes the entire agreement between the parties on the subject matter and supersedes all prior negotiations and understandings.

B.14 Signatures

PART C — PRE-SIGNING CHECKLIST

C.1 Reasonableness Audit

☐ Restricted Period is no longer than necessary (12 months is a strong default; 24 months only with documented justification)
☐ Restricted Territory tied to where Employee actually worked or had customer contact
☐ Activity restriction limited to same/similar duties or use of confidential information (no blanket "any role")
☐ Carve-outs for general-knowledge skills, passive investments, and general advertising
☐ Public-interest considerations addressed (especially for healthcare, broadcasting, technical specialists)

C.2 Consideration

☐ Identify and document the specific consideration provided (per Lake Land, continued employment suffices but additional consideration is strongly recommended)
☐ For mid-employment agreements, document the new benefit conferred (promotion, raise, equity, bonus)
☐ Consideration recital ties consideration specifically to the covenant

C.3 Industry-Specific Issues

☐ If Employee is a lawyer: do NOT use a practice-restricting non-compete (Ohio Prof. Cond. R. 5.6)
☐ If Employee is a physician: narrowly tailor; consider patient-access and rural-shortage public interest
☐ If Employee is in broadcasting/media: scrutinize public-interest considerations
☐ If Employee handles trade secrets: ensure separate trade-secret/confidentiality protections under R.C. 1333.61 et seq.

C.4 Documentation

☐ Retain original signed agreement in personnel file
☐ Retain evidence of consideration (offer letter, bonus payment, promotion memo, equity grant)
☐ Issue reminder of obligations at termination
☐ Document any waiver or modification in writing

C.5 Pre-Litigation Considerations

☐ Confirm the covenant is narrowly drafted before seeking injunctive relief (post-Kross risk of total invalidation)
☐ Preserve evidence of legitimate business interest (customer relationships, confidential information access)
☐ Confirm Employee was paid for any garden-leave period before seeking enforcement
☐ Consider whether inevitable-disclosure (under P&G v. Stoneham) provides an alternative or supplemental theory

SOURCES AND REFERENCES

• Raimonde v. Van Vlerah, 42 Ohio St. 2d 21, 325 N.E.2d 544 (1975): https://www.supremecourt.ohio.gov/rod/docs/pdf/0/1975/1975-Ohio-2-1.pdf
• Procter & Gamble Co. v. Stoneham, 140 Ohio App. 3d 260, 747 N.E.2d 268 (1st Dist. 2000)
• Lake Land Emp. Group of Akron, LLC v. Columber, 101 Ohio St. 3d 242, 2004-Ohio-786: https://www.supremecourt.ohio.gov/rod/docs/pdf/0/2004/2004-Ohio-786.pdf
• Kross Acquisition Co., LLC v. Groundworks Ohio, LLC, 2024-Ohio-590 (1st Dist.): https://www.supremecourt.ohio.gov/rod/docs/pdf/1/2024/2024-Ohio-590.pdf
• Ohio Uniform Trade Secrets Act, R.C. 1333.61–1333.69: https://codes.ohio.gov/ohio-revised-code/chapter-1333
• Ohio R.C. 2305.06 (8-year SOL on written contracts): https://codes.ohio.gov/ohio-revised-code/section-2305.06
• Ohio Prof. Cond. R. 5.6: https://www.supremecourt.ohio.gov/LegalResources/Rules/ProfConduct/profConductRules.pdf
• Briggs v. Butler, 140 Ohio St. 499, 45 N.E.2d 757 (1942)
• Lake Ridge Academy v. Carney, 66 Ohio St. 3d 376 (1993) (liquidated damages enforceability)
• Ohio Urology, Inc. v. Poll, 72 Ohio App. 3d 446 (10th Dist. 1991) (physician non-competes)
• Ohio Attorney General — Employment Law: https://www.ohioattorneygeneral.gov/