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Noncompete must be reasonable and necessary to protect legitimate interests

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in Employment Law,Human Resources

You probably want to protect yourself from unfair competition. And what could be more unfair than competition from a former employee—someone you had paid to learn everything about your business? That’s why many Ohio employers have employees sign noncompete agreements.

Before you rush out to have everyone sign, understand that such agreements have important limits. One is that if you sue a former employee, you will have to show that the contract restrictions are reasonable and necessary to protect your organization’s legitimate interests.

Recent case: Cintas Corp., a uniform company, sued Daniel Perry, a former employee, alleging he had breached an agreement that prohibited him from working for any competitor nationwide for two years. The agreement also included an attorneys’ fees provision that saddled the loser with paying the winner’s fees.

Cintas lost because the court said the agreement was overly broad under Ohio law. The court refused to change the terms and said Cintas owed legal fees and costs to the tune of $300,000. (Cintas Corp. v. Perry, No. 06-1958, 7th Cir., 2008)

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