February 21, 2020
by Mindi Wells, Wells Law LLC
What is your organization doing to protect its marketing strategies, proprietary systems, inventions and even your customer list from unauthorized use or disclosure?
Now’s the time to consider protecting your business by using a “restrictive covenant agreement” – an agreement that restricts or prevents one of the parties from doing something specific. Whether you are hiring new employees, bringing on partners, terminating an employee or thinking about selling your business, you should consider including restrictive covenants in your business agreements.
Here are common restrictive covenants and how they are used in employment and/or severance agreements:
Each of these clauses or agreements outlives the employment relationship (and employee handbook!) and is a binding contract. Employers can enforce these agreements even after the employer-employee relationship comes to an end. These clauses or agreements can be issued in employment contracts, and continued employment is sufficient consideration in Ohio. It is not necessary to provide additional compensation for these clauses to be valid. Having them in place can also be considered in valuation of the business in the event that you are planning to sell your company. Restrictive covenants can also be found in partnership agreements and as part of a sale of a business.
An attorney well versed in Ohio contract law can assist with drafting restrictive covenants that are tailored to protect your business and its unique interests. Avoid generic agreements that don’t cover enough of your company’s specific information or don’t place the right restrictions on how people can use the information or property.