Non-Compete contract in Ohio under duress?

Duress as a defense

A non-compete agreement is a contract. Duress is a valid defense to a contract. If you can prove that you signed the agreement with a "gun to the head," you may be able to avoid it using the defense that you signed it under duress.

However, it is difficult to establish duress in the non-compete setting, at least where you are an employee at will and the duress is in the form of a threat of termination. In Ohio an employer can refuse to continue your employment if you do not agree to the terms of a non-compete. Therefore, the flip side, that a non-compete signed to keep a job, is probably not duress sufficient to avoid the agreement. In other words, you have a choice, albeit unpleasant, to leave that employment without signing the non-compete.

It may be a different matter, however, if the employer threatened to withhold pay that you had already earned. That is closer to conversion (theft) and Ohio has a law requiring prompt payment of wages. If your employer withheld pay in a way that violated Ohio's law, it might constitute a basis for invalidating the agreement. Whether it amounts to duress, however, is probably going to depend on whether you had no other choice but to sign to get your paycheck. Since you could have sued for your paycheck, you may not reach that standard under those fact, either.

As for the over-breadth of the non-compete's restrictions, a court can redraw the restrictions so that it restricts your subsequent employment no further than is necessary to protect your employer's legitimate business interests. In your case, that may provide some relief.

Finally, while duress is often not a defense, the employer's failure to live up to a material part of its non-compete bargain may be a defense. In your case, if your compensation terms are part of the non-compete and your employer did not pay, or significantly and/or repeatedly delayed payment, you may be able to "rescind" the non-compete agreement as a remedy for your employer's breach of its part of the bargain.

I suggest that you get together with an attorney who has negotiated these issues and develope a strategy specific to your industry and job. I am happy to help, although the trip to Akron may be a bit far for you.

Best regards,

Neil.

posted by Neil Klingshirn  |  Apr 29, 2005 4:25 PM [EST]