Noncompete agreements are specific legal contracts that may sometimes be concluded between employees and employers in addition to the basic document. Though many courts do not approve of these agreements, many employers actually benefit from them (Cihon & Castagnera, 2017). On the contrary, workers usually find these contracts to be a severe problem threatening their future career; that is why there are particular factors that have to be taken into account when signing a noncompete agreement.
First of all, such legal contracts may only be concluded in case a new employer of the departing worker will likely be in direct competition with the former hirer, and this competition will damage the former employer’s business. Then, it is recommended to make such an agreement if workers know valuable information and can either share it with competitors after leaving their job or even start their own business and apply those trade secrets learned from the former hirer. Finally, if a new employer is in the same location as the former one, it is also a significant factor as the likelihood of the customers being stolen increases.
There are specific legal implications for both employers and employees for requiring workers to sign noncompete agreements, and these consequences are typically positive for the former and negative for the latter. As mentioned above, employers get a guarantee that in the near future, their former employees will not help their competitors (Cihon & Castagnera, 2017). Another favorable implication for companies is that fewer employees will want to leave knowing that they will not be able to work in this niche anytime soon unless they move to another area. In case a departing employee violates the noncompete agreement, former employers at least receive compensations (Cihon & Castagnera, 2017). In other words, such legal contracts are significant and rather effective protection for companies’ trade secrets.
At the same time, most workers get primarily negative implications after signing a noncompete agreement. First, their hirer may use the agreement to prevent them from leaving even though there will be no adverse consequences for the firm (Cihon & Castagnera, 2017). Then, employees may remain jobless after being fired because the document makes them wait for about a year before finding a similar job. Therefore, it is evident that noncompete agreements are a mainly stressful experience for ordinary workers.
As for the case study, when making its decision, the court referred to the following facts. First, the one-year time frame in the agreement had expired, which meant that only the claim for money damages but the request for injunctive relief was not moot. Second, the application of Ohio law would violate the public policy of Nebraska. Third, Nebraska had a greater material interest in the agreements. Finally, the agreements were invalid because of being overly broad.
The factors mentioned above allow to contrast and compare Ohio and Nebraska’s positions on noncompete clauses. To begin with, in both states, noncompete agreements are lawful and acknowledged. However, in Nebraska, these legal contracts should not be too broad; otherwise, they become unenforceable and are not reformed by the court. On the contrary, in Ohio, courts can reform unreasonable or overly broad noncompete agreements to make them reasonable. It is possible to suggest that Nebraska’s laws support ethical reasoning in the resolution of this case since this state’s court did not reform the agreement, which would be unethical.
Reference
Cihon, P. J., & Castagnera, J. O. (2017). Employment and labor law (9th ed.). Cengage Learning.