The past ten years have seen nearly 60% of states update their laws related to non-compete agreements (29 states and D.C.) On top of that, at the time of this writing 19 states – nearly 40% of the country – have either recently enacted legislation restricting non-compete agreements or have bills seeking to do so pending in their legislatures.
This post will examine the state of non-compete law in the states which make up the Cincinnati metro area:
Among these, Kentucky and Indiana have recently updated their laws, so they will be discussed first.
In 2022, Kentucky prohibited healthcare services agencies from entering into non-compete agreements with any direct care staff employees or contractors. That same year, Kentucky passed law prohibiting professional employer organizations from interfering with any existing non-compete agreement. The interplay between these two laws is still developing.
Under Settled Law
Under settled law, enforceable non-competes must be reasonable in scope and purpose, must not cause an undue hardship on the employee, and must not interfere with the public interest. Kentucky courts will weigh a variety of factors in determining whether these criteria are met, and may (but do not have to) modify unenforceable agreements to be both enforceable and consistent with the original intent of the parties. Kentucky non-competes may be presented to existing employees as a condition for continued employment so long as supported by consideration for the agreement.
Indiana recently enacted legislation banning non-compete agreements for physicians, effective for agreements entered into on or after July 1, 2023. Beyond the new exception for physicians, and similar to Kentucky law, Indiana non-competes are enforceable provided that they are reasonably necessary to protect an employer and do not unreasonably burden an employee nor violate the public interest.
Variety of Factors
Indiana courts will weigh a variety of factors in determining whether a non-compete agreement meets the above criteria, and possess the power to remove unenforceable portions of a non-compete agreement while allowing the enforceable provisions to remain effective. Indiana non-competes may be presented to existing employees as a condition for continued employment so long as supported by consideration for the agreement.
Ohio has not made any legislative changes to its non-compete law recently. Non-competes are legal in Ohio so long as they meet certain standards of fairness. Similarly to Kentucky and Indiana, Ohio non-competes must not be more restrictive than necessary to protect the employer’s legitimate business interests. They also must not impose an undue hardship on the employee and not be injurious to the public interest.
Ohio courts will weigh a number of factors in determining whether a non-compete agreement meets the above criteria.
Ohio courts will weigh a number of factors in determining whether a non-compete agreement meets the above criteria. Ohio courts also possess the power to modify the terms of a non-compete agreement to meet the above criteria and match the original intent of the parties, instead of deeming the entire agreement unenforceable. Ohio non-competes may be presented to existing employees as a condition for continued employment. An Ohio appeals court recently refused to enforce a non-compete agreement against a physician as against public interest – in a manner consistent with the legislative changes in Indiana and Kentucky, so that exception seems to be gaining significant steam.
A Changing Legal Landscape
The national legal landscape regarding non-compete agreements is changing rapidly, and there is no indication the changes will be ending any time soon. In this unsettled climate, it pays to engage skilled legal professionals experience in dealing with non-compete and restrictive covenant agreements. BHMK attorneys are licensed in Ohio, Kentucky, Indiana, and Florida, with decades of combined experience in those states, a proven record of successfully dealing with restrictive covenant issues, and their fingers on the pulse of developing law.
Contact BHMK today for thoughtful, focused assistance with all of your legal matters.