Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Noncompete bans—next up: Ohio, (Feb 27, 2025)

Law Firms Mentioned:Foley

Organizations Mentioned:Foley & Lardner, LLP

By Taylor Appling of Foley & Lardner

This month, Ohio joined the list of states with pending legislation to ban noncompetes.* With the FTC noncompete ban blocked on a nationwide basis last year, Ohio lawmakers introduced a bill on February 5, 2025, that would ban noncompete contracts as a condition of employment in the state. If enacted as written, Ohio would become the fifth state with such a ban, following California, Minnesota, North Dakota, and Oklahoma.

Ohio S.B. No. 11 seeks to prohibit employers from entering into, attempting to enter into, presenting or attempting to enforce an agreement that prohibits or penalizes a "worker" for competing. The law defines "employer" as anyone "who hires or contracts with a worker to perform services for the person." "Worker" is defined very broadly to include employees, independent contractors, externs, interns, volunteers, and apprentices.

The Ohio bill goes a step further to address choice of law and forum provisions in employment contracts. It provides that, for agreements entered into or modified after the law's effective date, an employer cannot enforce a non-Ohio venue or forum provision against a worker who primarily resides and does business in the state. Nor can employers deprive such workers of any substantive legal protections provided by Ohio laws, such as through a non-Ohio choice of law provision. There is an exception, however, if a worker is individually represented by counsel to negotiate the agreement and it is the worker who chooses the non-Ohio choice of law or venue.

Finally, the bill provides a private right of action to employees and authorizes the state attorney general to bring an action against the employer, with costs and fees available to the prevailing worker or attorney general, as well as actual damages, punitive damages up to $5,000, and injunctive relief.

The Ohio bill does not address confidentiality or non-solicitation agreements. The proposed law is also silent on whether the bill would apply retroactively to invalidate existing noncompete agreements that Ohio employees have already signed with their employers.

Employers expecting to enter (or those with existing) noncompete agreements with employees in Ohio or any of the other states with pending legislation, bans, or penalties should work with counsel to consider any implications of the pending legislation. We will continue to monitor and report on developments in this area of the law.

*Maine and Rhode Island failed to pass their respective legislation in April and June 2024, respectively, after their governors vetoed the bills that would have banned all employee noncompetes in those states.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Taylor Appling

Foley & Lardner

321 North Clark Street, Suite 3000

Chicago

United States

Tel.: +1 312 832 4500

E-mail: info@foley.com

URL: www.foley.com/

Attorneys: (Foley).

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