What are Restrictive Covenants?

What are Restrictive Covenants?

Some people are so excited to get a new job that when asked to sign an employment agreement, they do not think twice about it. They do not take the time to fully read the fine print and when the contract contains language they do not understand, they also do not take the time to ask questions or have an employment lawyer review it. It is in these cases that an employee sometimes learns they have signed away their rights but by then, it is too late. Some of the most common provisions that violate an employee’s rights are known as restrictive covenants. It is essential all workers in Ohio understand what these are, and what they mean for their future.

What are Restrictive Covenants?

Generally, there are three types of restrictive covenants included within employment agreements. They include:

• Non-disclosure agreements: A non-disclosure agreement prohibits you from publishing or sharing confidential information you may have access to as part of your employment. Non-disclosure agreements typically protect trade secrets, such as methods or formulas used by the business to give them a competitive edge.
• Non-compete agreements: A non-compete agreement means that you cannot work for any competitors of your employer once you leave your current position. Most non-compete agreements include a certain period of time and are limited to a certain geographic location.
• Non-solicitation agreements: Non-solicitation agreements prevent you from recruiting co-workers when you leave your current position to work for another employer. 

All of these agreements are meant to protect your employer, but it is important to contact a contract review lawyer before signing to ensure you are also protected.

Are Restrictive Covenants Enforceable?

While many states deem restrictive covenants as unfair and therefore, unenforceable, this is not true in Ohio. After a ruling was made in the landmark case Raimonde v. Van Vlerah, the Ohio Supreme Court deemed restrictive covenants as fair and enforceable. However, in order for these agreements to be deemed as legal, the Court ruled that they must be reasonable.

The term ‘reasonable’ is often debatable in legal issues. In regards to restrictive covenants, the Court ruled that an agreement is reasonable if:

• It does not bring harm to the public,
• It does not place the employee in undue hardship, and
• It does not extend past what is necessary to protect a genuine business interest of the employer

For example, an Ohio employer may prohibit their employee from working for an employer in the same industry, but the employer was in California where the original employer did not do business. In this instance, a non-compete agreement would likely not be deemed enforceable because it is not reasonable.

Our Ohio Contract Review Lawyers can Help With Your Case

Due to the ambiguity of the law, it is not always easy to understand if a restrictive covenant is lawful or not. At Marshall Forman & Schlein LLC, our Columbus contract review lawyers can review your agreement and determine if it is fair or violates your rights. Before you sign on the dotted line, call us or contact us online to schedule a meeting with one of our knowledgeable attorneys.