Non-Compete and Confidentiality Disputes Frequently Asked Questions
Non-compete, non-solicitation, and confidentiality disputes can affect an employer's customer relationships, trade secrets, workforce, and competitive position. They can also affect an employee's ability to work and earn a living. Ohio courts evaluate these disputes based on the language of the agreement, the parties' conduct, and the specific facts.
1. What are non-compete agreements, non-solicitation agreements, and confidentiality agreements?
A non-compete agreement restricts a person from working for a competitor or operating a competing business for a specified period, within a defined geographic area or market.
A non-solicitation agreement limits efforts to solicit an employer's customers, employees, vendors, or business relationships after employment ends. A confidentiality agreement, often called a nondisclosure agreement or NDA, requires a person to protect specified confidential information and prohibits unauthorized disclosure or use.
The enforceability of any restrictive covenant depends on its language, the legitimate interests it protects, and the circumstances surrounding its creation and enforcement.
2. Are non-compete agreements enforceable in Ohio?
Generally, a non-compete agreement may be enforceable in Ohio if it is reasonable and protects a legitimate business interest. Under the framework established in Raimonde v. Van Vlerah, an agreement must not impose a restraint greater than necessary to protect the employer, create undue hardship for the employee, or injure the public.
Ohio did not enact a generally applicable statute in 2021 that automatically prohibited or validated all non-compete agreements. As of 2021, Ohio courts continued to apply the fact-specific Raimonde reasonableness analysis, along with related Ohio case law. Courts may consider whether the restriction protects trade secrets, confidential information, customer relationships, or other legitimate interests. An overly broad agreement may be narrowed in some circumstances, but a court is not necessarily required to rewrite an unreasonable agreement.
3. What makes a non-compete reasonable or unreasonable?
Ohio courts may consider factors such as:
● The duration of the restriction.
● The geographic area or market covered.
● The type of work or competition prohibited.
● Whether the restriction protects a legitimate business interest.
● Whether the employee had access to confidential information or trade secrets.
● Whether the restriction prevents ordinary competition rather than unfair competition.
● The hardship imposed on the employee.
● The effect on the public and the availability of services.
● Whether the employee's skills were developed through the employment relationship.
● Whether the restriction is consistent with the parties' negotiations and the circumstances of separation.
A restriction that is narrowly tailored to protect legitimate interests is more likely to be enforced than a blanket prohibition that prevents a person from working in an entire industry or geographic region.
4. What is a trade secret, and how is it protected?
Under the Ohio Uniform Trade Secrets Act, a trade secret generally is information that:
● Derives independent economic value from not being generally known or readily ascertainable; and
● Is the subject of reasonable efforts to maintain its secrecy.
Examples may include proprietary formulas, source code, pricing information, customer lists, business methods, technical information, marketing plans, and other nonpublic information.
The Ohio Uniform Trade Secrets Act, including Ohio Revised Code Chapter 1333, may provide remedies for the unauthorized acquisition, disclosure, or use of trade secrets. Employers should use reasonable safeguards, such as access controls, confidentiality agreements, employee training, password protection, and procedures for returning company property.
5. What should an employer do when an employee leaves for a competitor?
An employer should promptly preserve relevant evidence and review the employee's agreements, job duties, access to confidential information, and post-employment conduct. The employer may need to secure company accounts, recover devices and documents, disable access credentials, conduct a forensic review, and document the return of company property.
The employer should avoid unsupported accusations or improper self-help. Depending on the facts, counsel may send a demand letter, pursue negotiations, seek temporary or preliminary injunctive relief, or file claims for breach of contract, trade-secret misappropriation, or other legally supported causes of action. The employer should act promptly because delay may affect available remedies and the ability to prevent disclosure or use of confidential information.
6. What should an employee do if accused of violating a non-compete or NDA?
An employee should preserve the agreement, employment records, communications, company policies, and other relevant evidence. The employee should not delete, alter, transfer, or disclose potentially relevant documents. The employee should also avoid using or retaining an employer's confidential information and should not make admissions before obtaining legal advice.
An attorney can review the agreement, determine whether it is reasonable and properly supported, evaluate the alleged conduct, assess whether the information qualifies as a trade secret, and advise the employee about responding to demands or court proceedings. The employee should comply with lawful preservation obligations while protecting personal privacy and legal rights.
7. What remedies are available for a breach?
Possible remedies depend on the agreement, the claims asserted, and the available evidence. They may include:
● Temporary, preliminary, or permanent injunctions.
● Orders preventing the use or disclosure of confidential information.
● Damages for actual losses.
● Disgorgement or recovery of unjust enrichment.
● A reasonable royalty in appropriate trade-secret cases.
● Contract damages.
● Punitive damages in cases of willful and malicious trade-secret misappropriation.
● Recovery of attorney fees when authorized by contract or applicable law.
Ohio Revised Code § 1333.62 addresses injunctions for trade-secret misappropriation, while §§ 1333.63 and 1333.64 address damages and attorney fees in specified circumstances. The availability of a remedy depends on the facts, the governing agreement, and whether the statutory requirements are satisfied.
8. What evidence is important in a non-compete or trade-secret dispute?
Important evidence may include:
● The signed employment agreement, non-compete, non-solicitation agreement, or NDA.
● Amendments, offer letters, policies, and separation agreements.
● Evidence of consideration and the circumstances surrounding execution.
● Job descriptions and evidence of the employee's responsibilities.
● Customer lists, pricing information, source code, business plans, and other allegedly protected information.
● Evidence showing the employer's efforts to maintain secrecy.
● Access logs, downloads, emails, text messages, cloud-storage records, and device data.
● Evidence concerning the employee's new position and alleged competition.
● Customer communications and solicitation records.
● Damages calculations, lost-profit analyses, and evidence of unjust enrichment.
● Communications concerning alleged disclosure, copying, or use of information.
● Testimony from company representatives, coworkers, customers, technical professionals, and forensic experts.
Parties should preserve electronically stored information and avoid altering or destroying potentially relevant evidence.
9. What deadlines apply to non-compete and confidentiality disputes in Ohio?
Deadlines depend on the legal theory, the agreement, the date of the alleged breach, when the conduct was discovered, and other facts. Under the current general framework, a written-contract claim may be subject to a six-year limitations period under Ohio Revised Code § 2305.06, while a claim involving an unwritten contract may be subject to a different period.
A trade-secret misappropriation claim under Ohio Revised Code § 1333.66 generally must be brought within four years after the misappropriation is discovered or should have been discovered through reasonable diligence. Other claims, including fraud or tortious interference, may have different deadlines. Contractual notice provisions, tolling rules, continuing conduct, and changes in the law may also affect the calculation.
Because limitations periods can be difficult to calculate—and Ohio statutory changes may affect future claims—an employer or employee should obtain legal advice promptly rather than relying on a general deadline.
10. When should I contact a business litigation attorney?
You should consider contacting a business litigation attorney as soon as a dispute arises or before taking action that may affect your rights. Early legal advice can help an employer protect trade secrets, preserve evidence, evaluate enforceability, and select an appropriate strategy. It can help an employee understand restrictions, respond to allegations, protect confidential information, and avoid inadvertent violations.
Braden Blumenstiel Legal Advocates Group, LLC represents businesses and individuals in non-compete, non-solicitation, confidentiality, and trade-secret disputes. Call 614-508-1677 or 888-343-9796 for a consultation.
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Disclaimer
This information is for educational purposes only and is not legal advice. Results, available remedies, and filing deadlines depend on the specific facts, agreements, claims, and court involved. An attorney-client relationship is not created by reviewing this material.
