Will an Ohio court enforce this non-compete, and what happens if it is too broad?
A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if it is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public; a covenant that imposes unreasonable restrictions will be enforced to the extent necessary to protect the employer's legitimate interests; and courts are empowered to modify or amend employment agreements to achieve such results (Raimonde). Raimonde abandoned the 'blue pencil' test, under which unreasonable provisions could be stricken if divisible but not amended or modified, and under which an unreasonable and indivisible restriction meant the entire contract failed.
The trap
Because an Ohio court can rewrite the covenant rather than strike it, the drafting incentive runs the other way from a strict blue-pencil state, and Raimonde says so, answering the argument that a rule of reasonableness would let employers dictate restraints without fear. What the employer loses is control of the terms: the reasonableness inquiry is fact-heavy, and Raimonde adopts a nine-item list of the factors properly to be considered - taken from Extine, the decision Raimonde departed from - which runs wider than the three or four usually quoted, including whether the employee is the sole contact with the customer, whether the employee is possessed with confidential information or trade secrets, whether the covenant seeks to eliminate unfair competition or merely ordinary competition, whether the benefit to the employer is disproportional to the detriment to the employee, whether the covenant operates as a bar to the employee's sole means of support, and whether the talent the employer seeks to suppress was actually developed during the employment.
6 authorities
The words that state the rule
We hold that a covenant not to compete which imposes unreasonable restrictions upon an employee will be enforced to the *26 extent necessary to protect the employer’s legitimate interests. A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if it is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public. Courts are empowered to modify or amend employment agreements to achieve such results.
The words that state the rule
The “blue pencil” test provides that if unreasonable provisions exist in such, a contract, they may be stricken, if divisible, but not amended or modified. It also provides that if restrictions are unreasonable and indivisible, the entire contract fails.
The words that state the rule
Appellee argues that adoption of a rule of reasonableness would allow employers to dictate restraints without fear, knowing that judges will rewrite contracts if they are taken to court. Such a contention is without merit.
The words that state the rule
Among the factors properly to be considered are: “ [t]he absence or presence of limitations as to time and space, * * * whether the employee represents the sole contact with the customer; whether the employee is possessed with confidential information or trade secrets; whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition: whether the covenant seeks to stifle the inherent skill and experience of the employee; whether the benefit to the employer is disproportional to the detriment to the employee; whether the covenant operates as a bar to the employee’s sole means of support; whether the employee’s talent which the employer seeks to suppress was actually developed' during the period of employment; and whether the forbidden employment is merely incidental to the main employment.” Extine, supra, at 406.
The words that state the rule
Thus, many courts 1 have abandoned the “blue pencil” *25 test in favor of a rule of “reasonableness,” which permits courts to determine, on the basis of all available evidence, what restrictions would be reasonable between the parties.
The words that state the rule
“In determining the validity of a convenant or agreement in restraint of trade, each case must be decided on its own facts * * #.” Extine, supra, at 403.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.