On January 22, 2025, Ohio Senators Louis W. Blessing (R-Colerain Township) and William P. DeMora (D-Columbus) introduced Senate Bill 11 ("SB 11"), which aims to prohibit certain post-employment agreements in the state of Ohio. If passed, this bipartisan bill would place Ohio among the minority of states with such legislation. As state lawmakers consider this departure from Ohio's current stance of enforceability of these agreements, there are four key provisions employers should be aware of:
1. SB 11 Defines "Worker" Broadly
Under SB 11, a "worker" is an individual who "provides services for an employer, including an employee, independent contractor, extern, intern, volunteer, apprentice, a sole proprietor providing service to a client or customer, and an individual who provides service through a business or nonprofit entity or association." This expansive definition would require employers to review nearly all existing agreements for compliance. Moreover, this broad definition increases the likelihood that more individuals will be considered workers, potentially exposing employers to additional legal obligations and liabilities.
2. SB 11 Bans the Enforcement of Certain Post-Employment Restrictive Covenants
SB 11 invalidates any agreement (or provision of any agreement) that prohibits a worker from:
- working for another employer for a specified period of time;
- working in a specified geographical area; and/or
- working for another employer in a capacity similar to the work the worker performed for the employer.
Additionally, SB 11 will void any agreement requiring a worker to reimburse their employer for training or any other services provided to develop the worker's skillset. If passed, employers will be prohibited from entering into or enforcing existing agreements containing the prohibited language.
3. SB 11 Prospectively Bans Forum/Venue Selection Clause
SB 11 prohibits any provision in an agreement requiring workers based in Ohio to litigate claims outside Ohio unless the worker is individually represented by counsel in negotiating the terms of the agreement. If passed, an employer's ability to enforce forum or venue selection clauses will be limited, potentially increasing litigation costs and complicating the management of employment-related claims.
4. Potential Penalties for Employers
SB 11 grants a private right of action for prospective or current workers presented with an agreement containing any of the prohibited provisions. Alternatively, these workers may file a complaint with the Ohio Attorney General or the Ohio Director of Commerce regarding the unenforceable provision. If an investigation reveals a "likely" violation, the Attorney General will bring an action on behalf of the worker or prospective worker. Notably, where the worker prevails, it is entitled to costs, reasonable attorney's fees, injunctive relief, and damages.
Additional context: It is important to note that the Federal Trade Commission's Non-Compete rule was blocked by a federal court and the National Labor Relations Board's acting General Counsel rescinded the memoranda issued by his predecessor regarding non-competition agreements. Thus, there is presently no national ban on non-competition agreements.
What does this mean for employers? Ultimately, the fate of post-employment restrictive covenants and agreements in Ohio will be determined this term. As written, SB 11 does not seem to affect the enforcement of restrictive covenants prohibiting the disclosure of confidential information, the disclosure of trade secrets, and the solicitation of customers or employees. SB 11 is also silent regarding non-competes in the sale of a business. The bill is in the early stages of the legislative process, but seems to be garnering key support. Considering the significant shift this will cause on the employment landscape in Ohio, it is unclear whether the bill will gain the support of Ohio Governor Mike DeWine. KMK's Labor and Employment Law Group will continue to monitor SB 11 and is prepared to assist as you re-examine employment agreements and internal policies regarding post-employment restrictive covenants.
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.
