What’s Up with Non-Compete Clauses Right Now—And What Does That Mean for Your Employment Contract?

One of the most common reasons people contact me is to ask about non-compete clauses in their employment agreements. These clauses can create uncertainty about what an employee can and cannot do after leaving a job—and with recent legal developments, the situation has become even more confusing. Let’s break it down.

What Is a Non-Compete Clause?

A non-compete clause is a contractual provision that restricts an employee from working for a competitor or engaging in similar business activities after leaving their employer. These clauses appear in employment agreements across many industries, including:

• Healthcare (e.g., doctors, nurses)
• Law
• Finance
• Beauty and wellness (e.g., hair stylists)
• Consulting and technology
  

They’re meant to protect legitimate business interests, but they also limit employees’ career mobility—and that tension is at the heart of the current legal debate.

The Changing Landscape: State vs. Federal Oversight

Traditionally, non-compete agreements have been governed by state law, and each state takes a different approach:

• Some states are quick to enforce them.
• Others find them unenforceable or limit their application heavily.
  

In April 2024, the Federal Trade Commission (FTC) adopted a final rule attempting to regulate non-compete agreements on a national level. The rule:

• Prohibits employers from entering into non-compete agreements with workers.
• Requires rescission of most existing non-compete agreements.
  

In short, the FTC aimed to eliminate non-compete clauses altogether. While this move was celebrated by many employee-rights advocates and attorneys who defend against these clauses, it also sparked legal challenges.

So Where Do Things Stand Now?

While the FTC’s rule is under legal review and its enforcement remains in flux, state law still governs the enforceability of non-compete agreements.

• As of now, 29 states and Washington, D.C. impose restrictions on non-compete agreements.
• These typically involve limitations on duration and geographic scope.
  

Ohio's Approach

Ohio continues to enforce non-compete clauses, but courts here apply a reasonableness standard. That means:

• The clause must protect legitimate business interests.
• It must not impose undue hardship on the employee.
  It must not harm the public interest.
  

If a non-compete clause is found to be overly broad in time or geography—or unnecessary to protect the employer’s interests—Ohio courts may refuse to enforce it or narrow its terms.

This balanced approach reflects broader judicial trends across the country, where courts are becoming more cautious about upholding these agreements.

What the Trend Means for Employees and Employers

Even though the FTC’s proposed rule has introduced uncertainty, one thing is clear: non-compete clauses are under growing scrutiny.

Courts are increasingly focused on ensuring these agreements:

• Serve legitimate purposes
• Don’t unduly restrict employees’ ability to work
• Don’t limit fair competition in the market
  

If you’re an employee concerned about your ability to work after leaving a job—or a business owner unsure whether your contracts will hold up—you need to stay informed and seek professional guidance.

Concerned About a Non-Compete Clause?

Whether you're reviewing a new employment contract or leaving a job and unsure of your obligations, it's critical to understand where you stand. Schedule a consultation today to get clarity on your rights, responsibilities, and the enforceability of your non-compete agreement.