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  1. #1
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    Mar 2013
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    Default Re: Is a Restrictive Covenant from an Employment Contract That Expired in 2010 Still

    Quote Quoting tk0106
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    I'm getting ready to make a change but stay in the same field and some of the restrictions may have an impact on where and what I do next. I'm not questioning any of the restrictions - I agreed to them. I'm questioning whether they are still valid or not. What I'd like to know is have I been essentially working under the terms of the 2009 contract which I'm still bound to, or have I been working without a contract the last 5 years?
    A wild guess is that you have been working without a written contract for the last 5 years. But that guess is not written in stone.

    However, whether or not you are bound by the restrictive covenants depends on the exact wording of those restrictive covenants and how they relate to the rest of the contract.

    If your contract is not more than a page or so, feel free to post it word for word in its entirety, redacting any identifying information, and we'll can give you some comments.

  2. #2
    Join Date
    May 2015
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    3

    Default Re: Is a Restrictive Covenant from an Employment Contract That Expired in 2010 Still

    The contract is only 3 pages but the first 2 don't have anything relevant. Page 1 is a brief description of the company and what it does and a list of my work related duties and responsibilities. Page 2 is my monetary compensation and a list of all my benefits. Page 3 is Term of Employment, Restrictive Covenant and Termination. Page 3 follows:

    Term of Employment

    The term of the Employee's employment shall commence on the 1st day of June, 2009 and shall continue for a period of one year until the 1st day of June, 2010. Due to the nature of the employer's schedule and workload, they reserve the right to extend the length of the contract up to 2 weeks to allow completion of an updated contract for the following year.

    Restrictive Covenant

    The Employee recognizes that the Employer has and will invest great time and money developing and maintaining a client base. With due regard to Employer's efforts in building and maintaining client relationships, the Employee agrees to enter into a restrictive covenant with reference to his future employment in <redacted> after the termination of his relationship with the Employer within certain restricted times and areas. This agreement is not an attempt to restrain the Employee from exercising his professional contravention of the Ohio Statutes but rather is an agreement by the Employee to maintain a hands off policy for a limited period of time within a limited geographical area.

    The Employee agrees that at the time of the execution of this contract, he has not developed any client relationships outside of the Employer. It is agreed by the Employer and the Employee that any client that the Employee comes into contact with as a result of his employment with the Employer will be a result of the goodwill developed by the Employer before the employment of the Employee. In addition, this agreement seeks to protect the goodwill, which will be developed by the Employer during the course of the Employee's employment.

    In consideration of these factors, the Employee agrees that if his employment is terminated for any cause, that for a period of one year after leaving the Employer's employment, he will not, directly or indirectly, either as an individual on his own, as a partner, joint venture, member of a limited liability company or as an employee or agent for any other person, or as an officer, directory, or shareholder or otherwise, establish a company that <redacted> within a five mile radius of the Employer. The Employee agrees to maintain a hands off policy with respect to clients of the Employer during the time period set forth. Specifically, the Employee agrees not to directly or indirectly solicit clients during the time period above set forth.

    This covenant on the part of the Employee shall be construed as an agreement independent of any other provisions of this agreement; and the existence of any claim or cause of action of the Employee against the Employer, whether predicated on this agreement or otherwise, shall not constitute a defense to the Employer's enforcement of this covenant.

    Termination

    The Employer shall have the right at any time during the term of this contract to discharge the Employee for cause. As used herein cause shall include, but shall not be limited to, the willful breach or habitual neglect of duties that the Employee is required to perform under this Agreement, the Employee's failure or refusal to comply with reasonable policies, standards and regulations that the Employer may establish from time to time.


    The redacted were because the nature of the business is sales but the field is small enough that the type of business or a description of it could be identifiable.

  3. #3
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    Mar 2013
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    Default Re: Is a Restrictive Covenant from an Employment Contract That Expired in 2010 Still

    My take on that is that you're bound by the 1 year 5 mile restriction as of the termination of your employment.

    Even though that written contract designated a specific period of employment you have admitted that your employment continued under the same terms and conditions year after year.

    Even without that admission, the contract is an executory contract which means that an item of performance is not performed during the contract period but at some future time after the contract expires.

    Your obligation continued to be postponed year after year while you continued working for the company.

    The good news is that you can work in the same field as long as you do it more than 5 miles from your employer's business and the bad news is that you can't touch any of his clients for a year.

    Ohio courts will enforce a restrictive covenant if it is reasonable in duration and geographical limit.

    I've studied non-competes for many years (I was a victim of one a long time ago) and 5 miles and 1 year is really the low end of limitations and is likely to be enforced by a court.

    However, there are numerous factors that a court would consider in analyzing even that limitation.

    The following website has a history of Ohio case decisions with regard to restrictive covenants. It's a good read and case rulings are cited.

    http://www.myemploymentlawyer.com/Oh...icle-cases.htm

    Here's a couple of scenarios for you to consider:

    1 - You leave your current employer. You get a job more than 5 miles away and you lay off his clients. After a year you are home free and nobody made any lawyers happy.

    2 - You ignore your contract and get a job within 5 miles and immediately start poaching clients. Your former employer serves you with a summons and complaint. Unfortunately, whether or not the lawsuit has merit is irrelevant at that point because you have to hire a lawyer to defend you. That's going to cost you $10,000 to $20,000 and you could lose. Meantime, your new job suffers because of the pressure of the lawsuit and your new employer decides he doesn't want the hassle and fires you. Now you're out of a job, no income, and still defending a lawsuit.

    3 - You leave your current employer and immediately file a lawsuit seeking a declaratory judgment quashing the restrictive covenants for whatever grounds your lawyer can come up with. It's still going to cost you $10,000 to $20,000 and you might or might not still have the same pressures while trying to make a living on a new job.

  4. #4
    Join Date
    May 2015
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    3

    Default Re: Is a Restrictive Covenant from an Employment Contract That Expired in 2010 Still

    Jack - Thank you very much for your opinion and for the link to Ohio cases. Before I came here I did a lot of research and came across a few cases similar to mine but none in Ohio. This will go a long way in helping me determine what my next step might be.


    Thanks again,


    Ted

  5. #5
    Join Date
    Mar 2013
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    Default Re: Is a Restrictive Covenant from an Employment Contract That Expired in 2010 Still

    States vary in their treatment of non-compete agreements so you have to go by what the Ohio court decisions are.

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