Use and limitations of a noncompete agreement

On Behalf of | Dec 16, 2019 | Business & Commercial |

With the rapidly changing landscape of the average workday in America, more businesses consider noncompete agreements a vital part of staying on the cutting edge. Part of this comes back to a more mobile workforce. As Millennials rise into higher levels of the workforce, they seem to have kept the tendency to switch jobs. Research from the Gallup Foundation shows that this generation is three times more likely than previous generations to change jobs each year.

With changeover in staff a new business reality, noncompete agreements give businesses a fighting chance of keeping competitors from having access to hard-won knowledge – and the profits that come with that advantage.

Uses of a noncompete agreement

As with many other legal concerns any business must face, it is not just large businesses that can benefit from a noncompete agreement. Any business that has a distinguishing training process, invests significant resources in training employees on specialized equipment, or primarily deals in intellectual or digital content may want to consider including such an agreement in the hiring process.


In the state of Ohio, noncompete agreements must show a “reasonable” scope of geography and time. Typically, Ohio courts do not support agreements lasting longer than two years, though there are always exceptions for specific industries or niche markets. As this measure is subjective, many businesses turn to legal counsel to ensure that the agreement remains enforceable.

The noncompete agreement must also pertain to a legitimate business interest. Most businesses use profit margins before and after a new process implementation or calculate the value of a training program to show why the noncompete agreement would significantly affect their viability.

Finally, the implementation of a noncompete agreement matters. Federal guidelines allow noncompete agreements at or before the date of hire as a condition for the new employee to get a job for your company. But a company cannot simply decide to ask all current employees to sign a noncompete agreement. Signing an agreement must come with some benefit for the employee, such as a promotion or something else of considerate value.