written by Michael S. Urban

CONTINUED EMPLOYMENT SUFFICIENT CONSIDERATION FOR A NON-COMPETITION AGREEMENT WITH AN AT-WILL EMPLOYEE

The Ohio Supreme Court recently held that continued employment is sufficient consideration (or value) to support a non-competition agreement with a current “at-will” employee. 

At the outset, it is helpful to provide some definitions:

An “at-will” employee is one who may terminate his/her employment at any time for any legal reason, or whose employment may be terminated by his/her employer at any time for any legal reason.

A non-competition agreement restricts the ability of an ex-employee to compete with his former employer.

For some time, there had been a split among lower Ohio courts as to the consideration (that is, promise or value) that had to be given by an employer to a current (as opposed to new) at-will employee in exchange for the employee entering into a non-competition agreement. Some Ohio courts had held that the mere fact of continued employment (that is, still having your job), after signing a non-competition agreement, was sufficient consideration to support a non-competition agreement with a current at-will employee.  In contrast, other Ohio courts had held that mere continued employment was not sufficient consideration to support a non-competition agreement with a current at-will employee, and that something more (e.g., a pay raise or promotion) had to be given.

In its recent decision, Lake Land Emp. Group of Akron, LLC vs. Columber, the Ohio Supreme Court resolved this split among the lower Ohio courts by holding that a current existing at-will employee may enter into a non-competition agreement for which the only consideration given to the employee by the employer is that the employee merely continues to be employed.  In other words, letting a current at-will employee keep his/her job is sufficient consideration; no additional consideration (such as a pay raise, promotion or employment for a defined period of time) is necessary.

In view of this Court decision, Ohio employers, who formerly may have been reluctant to enter into non-competition agreements with their current at-will employees, may wish to now enter into such agreements to protect the employers’ legitimate business interests. 

Any non-competition agreement, under Ohio law, will still need to be reasonable in its restrictions (e.g., duration, geographic scope).  It remains unchanged that an Ohio court, in reviewing a non-competition agreement, will inquire into and determine whether the restrictions in the agreement are reasonable; that is, whether the restrictions in the non-competition agreement are no greater than are required for the protection of the employer’s legitimate business interests; do not impose an undue hardship on the employee; and are not injurious to the public.

For additional information on this Legal Update and other employment and labor law issues, please contact Michael Urban at Amer Cunningham Co., L.P.A.   He can be reached by calling 330/762-2411 or by e-mail at murban@amer-law.com.