Ohio Court of Appeals Refuses to Enforce Non-Compete or Award Damages and Dismisses Counterclaims.

On Monday, the Warren County Court of Appeals upheld the dismissal of both the employer and contractor’s claims involving the enforcement of a non-compete clause and abuse of process claims. Reliant Serv. MJF, L.L.C. v. Brown, 2025-Ohio-5364.   The Court treated the non-complete clause involving the independent contractor as though he were an employee of the employer contracting business.   It found that the clause was unenforceable because it was overly broad in prohibiting all competition and in failing to show any protectible interest such as an investment in training the contractor or in confidential information.  In its breach of contract claim, the employer also failed to show that its level of business with that customer (or any other customer) had declined as a result of the allegedly unfair competition.  The court also refused to award the individual damages for the amount of lost income he suffered while the TRO was in effect because he was limited to the amount of bond required for the TRO and failed to challenge the low amount with evidence.  It also found that he could not prevail on his counterclaims because the employer was permitted to file a lawsuit, even if it lost on the merits of its claim. 

According to the Court's opinion, the plaintiff employer ran a construction staffing business where it would supply individuals to complete the “punch lists” for newly constructed homes (i.e., drywall repairs, painting, etc.)  It hired the defendant individual/independent contractor in 2013.  He already had 25 years of experience as a handyman and did not receive any training to perform his assignments.  The employer had a large customer and a few smaller ones.   In 2013, it required its employees and contractors to sign a non-compete form which prevented them from competing or providing services to identified customers, including Ryan Homes.  The defendant signed that form and began performing assignments, including for Ryan Homes.   When another court found the form unenforceable, the employer required the contractors to sign an independent contractor agreement which contained a different non-compete clause preventing any competition for one year.    The defendant also signed that agreement, but the employer mysteriously back dated it to 2013. 

The defendant formed his own contracting/handyman business in September 2021 and began performing work for his new business for Ryan Homes as well as for the employer.  He then resigned from the employer in October 2021.  The employer discovered his competition with Ryan Homes and filed suit in March 2022 and obtained a TRO against the competition and was only required to post a $1K bond.   While the magistrate initially enforced the non-competition agreements, the trial court in December ultimately dissolved the TRO and preliminary injunctions, but also rejected the counter claims for abuse of process and tortious interference.   The court also refused to award damages of $115K which the defendant claimed to have lost as income while the TRO and PI were in force and limited the defendant to the $1K bond.  Both parties appealed and the Court of Appeals affirmed.

First, the courts refused to treat the non-compete form and independent contractor agreement clause as integrated.  The employer argued that the defendant should at least be enjoined from working for Ryan Homes because it was specifically identified on the non-compete form.  However, the magistrate and trial found that the clause replaced the form and the employer had failed to appeal that finding.    In any event, the courts concluded that the clause was overly broad because it contained no geographic restrictions.  The employer’s business was concentrated in four counties, but the clause prevented all competition, even outside that area.   

A noncompete covenant is reasonable if (1) its restrictions are not greater than what is required to protect the employer, (2) it does not impose an undue hardship on the employee, and (3) it is not injurious to the public. Id. at 26. In determining the validity of a noncompete covenant, each case must be decided on its own facts. Id. at 25. A plaintiff seeking to enforce a noncompete covenant must establish, by clear and convincing evidence, each of the three elements above.  . . .

In determining whether a noncompete covenant is reasonable, a court should consider the following factors: (1) the absence or presence of limitations as to time and space, (2) whether the employee represents the sole contact with the customer, (3) whether the employee is possessed with confidential information or trade secrets, (4) whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition, (5) whether the covenant seeks to stifle the inherent skill and experience of the employee, (6) whether the benefit to the employer is disproportional to the detriment to the employee, (7) whether the covenant operates as a bar to the employee's sole means of support, (8) whether the employee's talent which the employer seeks to suppress was actually developed during the period of employment, and (9) whether the forbidden employment is merely incidental to the main employment.

 . . . The Contract's noncompete clause is a statewide, if not worldwide, limitation from employment with any of [the employer’s] home-builder clients for a period of one year. A one-year time period for a noncompete covenant is generally reasonable.  . . . However, in the circumstances of this case, where [the defendant] only performed work for [the employer’s] client, Ryan Homes, in Ohio's four southwest counties, the lack of any geographic limitations makes the noncompete clause unduly restrictive. . . . .

Further, the employer failed to show a protectible interest.  The clause was not tailored to prevent the misuse of confidential or trade secret information.  Further, while such clauses are enforceable to prevent unfair competition and to protect an investment in employees, they are not enforceable to prevent fair competition.  There was no evidence that the employer had invested in any special training of the defendant.  Rather, he was hired because of his extensive prior experience and the employer could not prevent him from using his previously acquired skills to compete against it.   

An employer's legitimate interests in utilizing a noncompete covenant include "prevent[ing] the disclosure of a former employer's trade secrets or the use of the former employer's proprietary customer information to solicit the former employer's customers."  . . .  Another legitimate purpose of a noncompete covenant is the retention of employees in which an employer has invested time and other resources.  . . .  However, this case did not implicate trade secrets or confidential information. Moreover, the record plainly shows that [the employer] did not invest time and money in training [the defendant], and did not play any role in [his] development as a skilled and professional punch-list contractor. Rather, [he] worked as a handyman providing handyman and punch-list services for 25 years prior to his employment with [it]. Stated differently, [his] knowledge and skills were not developed or improved while he was a[n] . .  independent contractor. Noncompete covenants that prevent an employee from using his or her general skills and experience in the marketplace weigh against enforcement.  . . .  In addition, while the record indicates [he] dealt directly with Ryan Homes in scheduling work as a[n]independent contractor, he was not the sole contact with Ryan Homes.

Nonetheless, the Courts found that the defendant was not unduly harmed because the clause had never been enforced to prevent him from using his skills in other contexts, such as a handyman or in other commercial construction.

Despite an employer's interests, enforcement of a noncompete covenant cannot cause undue hardship on a former employee.  . . . "To be sure, any person who is prevented from practicing his profession or trade for a period of time in an area in which it has been practiced, suffers some hardship.  However, the Raimonde test requires more than just some hardship."  . . .  "The public's interest in determining the reasonableness of a noncompete [covenant] 'is primarily concerned with . . . promoting fair business competition.'"   . . .  In highly competitive industries, enforcement of noncompete covenants are often found to not adversely affect the industry or harm the public in limiting the public's options in obtaining goods and services. Id.

[The Defendant] is providing the same type of punch-list services for Ryan Homes now as he did for it when he worked as a[n] independent contractor. The forbidden employment is therefore not merely incidental to the main employment under the ninth Raimonde factor. Although the Contract's noncompete clause prevents [him] from working for or with [the employer’s] home-builder clients for a period of one year, it does not act as a complete bar to his sole means of support or stifle his inherent skills and experience. Fenik testified that [the employer] does not prevent current and former independent contractors from providing general handyman services or landscaping to residential property owners or from working in commercial construction. Fenik stated that many individuals working for [it], in fact, do side work on the weekends or if they have an opening in their work schedule. [The defendant’s] testimony revealed that during the nine months the preliminary injunction was in effect, he did not seek any alternative handyman employment or work in commercial construction. Moreover, although the record shows [he] worked mostly, if not exclusively, for Ryan Homes as a[n]independent contractor, he never inquired of [the employer] if he could work for its other home-builder clients during the nine-month preliminary injunction. The Raimonde test requires more than just some hardship. [He] did not show that he could not readily obtain a position or establish a non-competing practice.  . . .  Thus, the fifth and seventh Raimonde factors weigh in favor of enforcing the Contract's noncompete clause.

In addition, as for the employer’s breach of contract claim – which was tried in 2024, it failed to show that it had suffered any financial losses.  It sought a percentage of the fees which the defendant had earned from  Ryan Homes.  However, it continued to receive the same amount of business from Ryan Homes before and after the period when the defendant competed against it.  Any business he took was from other competitors, not the defendant: “there is no evidence this business would have gone to [the employer].”

The Court also affirmed the dismissal of the defendant’s counterclaims.  It refused to find that the act of filing a lawsuit can constitute tortious interference merely because the employer could not meet the clear and convincing evidence standard of evidence:

Turning to [his] argument, [the employer’s] mere resort to filing a civil lawsuit against [him] and seeking a preliminary injunction does not constitute a tortious interference with a business relationship. To hold otherwise would have a chilling effect on valid lawsuits seeking to enforce contractual provisions such as a noncompete covenant. Moreover, [he] has failed to articulate any damages resulting from [its] alleged tortious interference with a business relationship. Here, [he] was out of work for several months as a result of the magistrate's decision granting [the employer] a preliminary injunction. Thus, [his] claimed loss of income was not caused by [its] filing of the lawsuit and seeking of a preliminary injunction, but by the magistrate granting the preliminary injunction.

The Court rejected the abuse of process claim on similar grounds:

We find there is no genuine issue of material fact regarding [his] abuse of-process counterclaim because [he] failed to present evidence establishing [the employer’s] ulterior motive. That is, there is no summary judgment evidence that [it] had an ulterior motive in seeking injunctive relief. Here, [it] filed a lawsuit against [him] and sought injunctive relief specifically to prevent [him] from competing directly with it. These are not "ulterior purposes" that [it] aims to accomplish but are clearly the stated and primary goals of these proceedings. Furthermore, as plainly shown by its December 12, 2022 decision dissolving the preliminary injunction, it is well within the trial court's jurisdiction to grant or deny a preliminary injunction. . . The trial court, therefore, did not err in granting summary judgment in favor of [the employer] on [his] abuse-of-process counterclaim.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

OFCCP Announces Updated Jurisdictional Thresholds for Affirmative Action for Vets and Disabled

 Earlier this year, President Trump rescinded Executive Order 11246 which required affirmative action by certain federal contractors and subcontractors for women and minorities.  However, there are statutory affirmative action obligations which are still being enforced and apply to federal government contractors and subcontractors to benefit veterans and individuals with disabilities under the Vietnam Era Veterans Readjustment Assistance Act and the Rehabilitation Act. Like most affirmative action obligations, there are two financial and headcount thresholds for basic affirmative action obligations and formal obligations pursuant to a written plan.  These financial thresholds are now updated for inflation every five years and new thresholds became effective as of October 1.

OFCCP announced last month that the threshold for basic affirmative action obligations for individuals with disabilities has risen from $15K to $20K.  Contractors and subcontractors who do not have at least one federal contract of at least $50K (and at least 50 employees) now no longer need to have formal or written affirmative action programs for individuals with disabilities. 

Similarly, the threshold for basic affirmative action obligations for veterans (which includes, among other things, listing most job openings with the local unemployment office) has risen from $150K to $200K.  Contractors and subcontractors who do not have at least one federal contract of at least $200K (and at least 50 employees)  now no longer need to have formal or written affirmative action programs for veterans, which would include conducting availability analyses, and filing an annual report, etc.

As a part of its ongoing contractor assistance efforts, the Office of Federal Contract Compliance Programs developed a new “Jurisdictional Thresholds” infographic and updated its webpage. The infographic helps employers, employees, and other interested parties easily determine when OFCCP’s Section 503 and VEVRAA regulations apply to contractors doing business with the federal government. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects NLRB's Power To Award Compensatory Relief, But Affirmed ULP Against Starbucks

Last week, a divided Sixth Circuit rejected the NLRB’s right to award compensatory damages as a remedy for unfair labor practices, but unanimously agreed to affirm the finding of an illegal termination by Starbucks during a union campaign.   NLRB v. Starbucks Corporation, No. 23-1767 (6^th Cir. 11-5-25).   The unanimous Court found that the NLRB met its burden of proving that the employer treated the supervisor more harshly because of her union activities because it terminated her for a first policy violation six weeks after it happened, but shortly after it learned about unfair labor practices and other union activities and had not fired other supervisors for the same infraction on a first offense.  However, the Court concluded that statutory and legal history provided that “affirmative action” powers given to the NLRB are limited to equitable remedies, and not the ability to punish or deter or to award monetary relief unrelated to the unfair labor practice (such as child care, credit card fees, etc.).  Moreover the Seventh Amendment requires jury trials for compensatory and punitive damages, meaning a government agency lacks such unilateral authority.

According to the Court’s opinion, the supervisor began a union organizing campaign.  She was fired in April several months later – along with another employee – because she violated company policy by leaving that employee alone in the store (in high crime neighborhood) in February for 30 minutes without previously informing management.  The employee was fired for using profanity in front of customers.  Another supervisor had violated the same policy several times two years earlier before he was fired.  Although the supervisor had reported the policy violation the next day, she was not demoted or suspended pending investigation.  While the manager who recommended her termination was unaware of all of her activities, the legal department could not deny the same.

While the Court found the Board sustained its burden of proof for the ULP, it still rejected some of required relief which Starbucks had been ordered to provide. 

§ 10(c) of the NLRA authorizes the Board to order the employer to “cease and desist” from that practice and to “take such affirmative action, including reinstatement of employees with or without back pay, as will effectuate the policies of th[e] [NLRA.]”  . . .. the Board now reads the phrase “affirmative action” to authorize it to compensate “affected employees for all direct or foreseeable pecuniary harms suffered as a result of the [employer’s] unfair labor practice.” . . .

 . . . the Board then crafted a “myriad of other possible examples” of direct or foreseeable harms: childcare costs, transportation expenses, credit card debt (including interest and late fees thereof), penalties on early withdrawals from retirement accounts, and the loss of a car or home from missed loan and mortgage payments. . . .

  . . .

The question before us is whether Congress used “affirmative action” as a phrase of art referring only to equitable remedies, as Starbucks urges, or instead as a literal phrase encompassing all types of relief, including those legal in nature, as the Board suggests. To our minds, all signs point to the former.

In analyzing the text, the Court determined that legal precedents and legal scholars: “likewise describe “affirmative action” as authorizing relief that is equitable in nature.”

Consistent with this shared understanding, the Board’s authority under § 10(c) to order employers to take “affirmative action” encompasses only equitable remedies. That phrase has a well-established meaning associated with the function or effect of traditional equitable remedies. And “where Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word.”  . . .  Our conclusion, we note, aligns with the Supreme Court’s NLRA-related recognition that “Congress did not establish a general scheme authorizing the Board to award full compensatory damages for injuries caused by wrongful conduct.” Int’l Union, UAW v. Russell, 356 U.S. 634, 643 (1958). Rather, “[t]he power to order affirmative relief under § 10(c) is merely incidental to the primary purpose of Congress to stop and to prevent unfair labor practices.” . . .

In addition to the textual analysis, the Court concluded that

the structure of § 10, which further confirms the equitable nature of “affirmative action.” Begin with the fact that Congress, in the NLRA, did not make the Board’s remedial orders self-executing. Rather, federal appellate courts must enter a “decree enforcing, modifying and enforcing as so modified, or setting aside in whole or in part the order of the Board.” . ..

 . . . . Congress, when bestowing federal courts with the power to award damages remedies, ordinarily does so only with express limits. . . . .

Finally, the Court noted that the Seventh Amendment reserves for juries the right to award compensatory and punitive damages.   Having recently concluded that the SEC lacks the authority as a government agency to impose damages, “the Supreme Court reaffirmed that the Seventh Amendment encompasses all claims that are “legal in nature,” regardless of whether they derive from statute or common law.”

In any event, the Board seeks to grant monetary remedies at least partly designed to punish or deter employers acting unlawfully. That is the very definition of legal relief.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Columbus Amends Pay Transparency Ordinance To Require Salary Ranges With External Job Postings

 Last week, the Columbus City Council approved amendments to its pay transparency ordinance CCC §2335 which requires all Columbus employers with more than 15 employees to provide job applicants with “a reasonable salary range or scale” with each external job posting.  While the ordinance becomes effective in 30 days, it will not be enforced until 2027 by the City Community Relations Commission.

The key terms of the amendment include:

 D) “Employment posting” means any solicitation intended to recruit applicants for a specific available position, and includes any postings done electronically, or with a printed hard copy, that includes a description of the position and/or qualifications for desired applicants. “Employment posting” does not include a solicitation for recruiting applicants that is replicated and published without an employer’s consent.

  . . .

Employers shall provide a reasonable salary range or scale for potential employment in employment postings. The reasonableness of a salary range or scale shall be based on factors specific to the available position including, but not limited to:

(1) The flexibility of the employer’s budget;

(2) The anticipated range of experience job applicants may have;

(3) The potential variation in the responsibilities of the position;

(4) The opportunities for growth in and beyond the position;

(5) The cost of living for the various locations in which an applicant may work; and

(6) Market research on comparable positions and salaries.

WCMH reported that ““We wanted to ensure that as Columbus grows and more businesses come to Columbus or new businesses start, that they’re not just doing business in Columbus, but doing the business of Columbus,” Columbus City Councilmember Lourdes Barroso de Padilla said.” 

The full ordinance – with redlined amendments – can be found here.   

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Court Enforces Repayment of Hiring Bonus

 Last week, the Cuyahoga County Court of Appeals affirmed the terms of an employer’s hiring bonus when the employee resigned less than a year after starting training and was required to repay the entire amount of the five figure hiring bonus.  CommuteAir, L.L.C. v. Bremer, 2025-Ohio-4843.  The Court rejected the defendant’s argument that he was constructively discharged because there was no evidence that his working conditions were intolerable.  He claimed that he could not complete training because of his wife’s illness and a death in the family, but could not refute the employer’s evidence that it attempted to reschedule his training without his cooperation in communication.  Finally, it rejected his argument that the hiring bonus was a non-forfeitable wage instead of a bonus that could be subject to conditions or that this breach of contract claim was preempted by the Railway Labor Act.

According to the Court’s opinion, the employer hired the defendant for its pilot training program.  He signed an agreement for a hiring bonus of $22K that he had to repay in full if he failed to complete his training or voluntarily resigned or was fired for cause in less than a year and half of the bonus if after one year, but less than two.  He delayed the commencement of his training by more than six months and then resigned less than a year later.  The agreement required him to repay the full amount, plus fees and costs. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.