In Acordia of Ohio, L.L.C. v. Fishel, 2012-Ohio-2297, the Ohio Supreme Court held that while employees' noncompete agreements transfer by operation of law following a merger with an L.L.C., the language in such an agreement may preclude the L.L.C. from enforcing the agreement. The Court found that the particular agreements in dispute did not contain language that any successor corporations had a right to enforce a noncompete agreement between the original corporation and the employee. As a result, the Supreme Court held that the language in the noncompete agreement precluded Accordia from enforcing the noncompete restrictions against Fishel and others.
Employers regularly utlize non-compete agreements to protect their interests-such as trade secrets, confidential information and resources spent to train and educate their employees. The necessary result is that many employees face the decision whether or not to execute such an agreement when starting a new job or even accepting a promotion. How to properly draft an enforceable agreement not to compete, and deciding whether one should commit to the same, are questions that do not always have a definite answer. Nonetheless, with some forethought and proper planning, both employers and employees can reduce the chances of an adverse outcome related to a non-compete agreement.
Non-compete agreements, also known as "covenants not to compete," previously were part of any typical employment and/or compensation agreement between companies and their executives. While most executives may not know the exact legality of non-competition agreements, most realize their potential ramifications and seek advice from a qualified employment law attorney prior to signing them. The same is not always true of executives presented with a stock option agreement; however, it should be. Here's a typical scenario where non-compete agreements wind up in Court: An executive obtains employment with a corporation (company "A") as a regional vice president of marketing. At the beginning of his or her employment with this company, the executive signs a non-compete agreement as part of a compensation and/or employment contract. Over a period of 15 years, the executive works diligently creating a rather impressive name for himself or herself. Company "A" decides to restructure its work force and wants the executive to relocate to a different market out of state. The executive is reluctant because of familial and community obligations. The executive, having established a remarkable reputation over the 15 year period, decides to take other employment and sign up with Company "B." There is a dispute as to whether Company "B" is considered a competitor of Company "A." The case ends up in litigation over the enforceability of the executive's non-competition agreement executed with Company "A."