Executive Non-Competes, Garden Leave, and Forfeiture-for-Competition in Ohio

Senior executives sign the most aggressive restrictive covenants in the workforce, and they sign several of them at once: a non-compete, customer and employee non-solicits, a no-hire, a confidentiality and trade-secret agreement, and increasingly a garden-leave provision or a forfeiture clause that takes back equity if you compete. These terms decide whether you can work in your own industry after you leave, which makes them as financially important as the severance. They are also, for executives, among the most negotiable terms in the package, on the way in and again on the way out.

The legal ground has also shifted. The federal rule that would have banned most non-competes never took effect, so the question is once again governed by state law. This is a guide to how Ohio treats executive restrictive covenants, what garden leave and forfeiture-for-competition actually do, and where the leverage to negotiate them comes from.

The covenants an executive is actually signing

"Non-compete" is shorthand for a bundle of restrictions that usually travel together, and they are not equally enforceable. The classic non-compete bars you from working for a competitor for a period of time in a defined area. A customer non-solicit bars you from soliciting or servicing the company's clients. An employee non-solicit or no-hire bars you from recruiting former colleagues. A confidentiality and trade-secret covenant protects the company's proprietary information indefinitely. Courts scrutinize these differently: a narrow customer non-solicit tied to relationships you actually handled is far easier to enforce than a broad industry-wide non-compete, and a trade-secret restriction stands on its own footing entirely. The first step in any executive exit is to separate these strands, because the company often has a strong claim on one and a weak claim on another.

How Ohio treats non-competes

Ohio is one of the relatively few states with no statute restricting employer non-competes. It has not followed states like California, which bans them outright, or the wave of states that in 2025 and 2026 barred non-competes below a salary threshold. Instead, Ohio enforceability is governed by the Ohio Supreme Court's decision in Raimonde v. Van Vlerah, 42 Ohio St.2d 21 (1975), under a three-part reasonableness test: a covenant is enforceable only to the extent it (1) is no greater than necessary to protect the employer's legitimate business interests, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public.

Two features of Ohio law matter especially for executives. First, Ohio courts apply the covenant only to the extent it is reasonable and will modify, or "blue-pencil," an overbroad agreement rather than strike it entirely, rewriting the scope, duration, or geography down to what is reasonable. That cuts both ways: an executive cannot count on an overbroad covenant being thrown out wholesale, but an aggressive restriction will often be narrowed. Second, continued at-will employment can supply the consideration for a covenant signed after hiring, so a non-compete presented mid-career is not unenforceable simply because you received nothing new for signing it (Lake Land Employment Group of Akron, LLC v. Columber, 101 Ohio St.3d 242 (2004)). In practice, Ohio courts routinely enforce reasonable non-competes of up to one year, and sometimes two, with longer terms where a sale of a business is involved. The general principles are covered on our non-compete practice page and in our overview of non-compete agreements in Ohio; this article focuses on the executive-specific wrinkles.

What happened to the FTC ban

In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide. It never took effect. A federal court set it aside in Ryan, LLC v. FTC, the Commission voted to abandon its appeal in September 2025, and the rule was formally removed from the Code of Federal Regulations effective February 12, 2026. The FTC has said it will instead challenge particular non-competes case by case under Section 5 of the FTC Act, but there is no federal ban. For an Ohio executive, that means the analysis returns to Raimonde and the specific wording of your agreement.

Garden leave: paid, employed, and on the sidelines

Garden leave is a notice-period device borrowed from English practice and increasingly common in senior U.S. agreements. Instead of (or in addition to) a post-employment non-compete, the executive agrees to a long notice period, often three to twelve months, during which the company can require the executive to stop working but keep them employed and fully paid. You remain on the payroll, retain benefits, and continue to owe duties of loyalty and confidentiality, but you are out of the market and away from clients and information.

For the company, garden leave has real advantages: a still-employed executive owes fiduciary and contractual duties that are easier to enforce than a post-termination non-compete, and continued pay removes the "undue hardship" and consideration arguments that weaken a traditional covenant. For the executive, garden leave is a mixed bag. The income continues, which is valuable, but the clock on your industry knowledge and relationships keeps running while you sit out, and a new employer may not wait. The terms worth negotiating include the length of the notice period, whether garden leave runs concurrently with (and therefore offsets) any post-employment non-compete rather than stacking on top of it, whether you can accept other non-competitive work, and how equity vesting and bonus eligibility are treated during the period.

Forfeiture-for-competition: the covenant that skips the courtroom

The most underappreciated executive restriction is the forfeiture-for-competition clause. Rather than asking a court to enjoin you from competing, it simply provides that if you compete, you forfeit something valuable: unvested (or even already-vested) equity, a deferred-compensation balance, a long-term incentive payout, or contractual severance. The company does not need an injunction; it just stops paying or claws back. Because no court order is required to keep you out of a job, these clauses can deter competition even in circumstances where a traditional non-compete would be unenforceable.

Courts treat these provisions inconsistently. Some apply the "employee choice" doctrine, reasoning that an executive who voluntarily leaves and chooses to compete has simply elected to give up a benefit, and decline to subject the forfeiture to the same reasonableness scrutiny they would apply to an injunction. Others look through the form to the substance and analyze a forfeiture-for-competition clause as a restraint of trade subject to reasonableness review, particularly where the sums are large enough to function as a de facto non-compete. The treatment can also turn on the type of plan at issue and any choice-of-law provision. The practical point for an executive is that the equity plan and deferred-comp documents have to be read alongside the non-compete, because a covenant a court would never enforce by injunction may still cost you a fortune through forfeiture. This is the same documents-control-the-outcome theme that runs through equity treatment generally, covered in our guide on unvested equity at termination.

Choice of law is a trap

Executive agreements frequently specify that another state's law governs, often Delaware (the company's state of incorporation) or the state of a parent company's headquarters. That choice can be decisive, because states differ enormously on how readily they enforce non-competes and forfeiture clauses. An Ohio executive may assume Ohio's reasonableness analysis protects them, only to find the agreement is governed by a state far more willing to enforce restrictions as written, or one that applies the employee-choice doctrine to forfeitures without reasonableness review. Whether the chosen law will actually be applied is itself a litigable question, but the choice-of-law and forum provisions deserve as much attention as the covenants themselves.

Where the leverage is

Executives have more room to negotiate restrictive covenants than almost any other group of employees, for a simple reason: the company wants the covenants to be enforceable, and overreaching undermines that goal. Reasonable, well-tailored restrictions hold up; sweeping ones invite a court to blue-pencil or an executive to fight. That dynamic, plus the leverage of unvested equity, an earned bonus, and any underlying claims, is what makes the covenants negotiable as part of an exit. Common and achievable asks include narrowing the definition of "competitor" to the company's actual line of business, shortening the duration, limiting the geography to where you truly operated, carving out a named future employer or role, converting a broad non-compete into a focused customer non-solicit, securing a garden-leave offset so the notice period counts against the non-compete, and clarifying that a without-cause termination releases you from the non-compete entirely. The covenants should never be evaluated in isolation; they are one part of the larger executive separation, and they interact directly with severance and equity.

The bottom line

For a departing executive, restrictive covenants determine whether the next job is even possible, which makes them as important as any dollar figure in the package. Ohio will enforce a reasonable non-compete and may rewrite an unreasonable one; garden leave keeps you paid but sidelined; and a forfeiture-for-competition clause can penalize competition without any court order at all. All of it is governed by the precise wording of documents the company drafted, and all of it is negotiable, but the time to address it is before you resign or sign a separation, not after.

Frequently Asked Questions

Are non-competes enforceable against executives in Ohio?

Yes, if they are reasonable. Ohio has no statute banning non-competes and follows the Raimonde test: a covenant is enforceable only to the extent it is no broader than necessary to protect a legitimate business interest, does not impose undue hardship on the executive, and is not injurious to the public. Ohio courts can also blue-pencil an overbroad covenant down to what is reasonable rather than void it.

Did the FTC ban non-competes?

No. The FTC's 2024 rule that would have banned most non-competes never took effect. It was set aside in court, the FTC abandoned its appeal in 2025, and the rule was removed from the Code of Federal Regulations effective February 12, 2026. Enforceability is again governed by state law, which in Ohio means the Raimonde reasonableness analysis.

What is garden leave?

Garden leave is a long notice period during which the executive stays employed and is paid in full but can be required to stop working and stay away from clients and confidential information. It keeps the executive on the sidelines while preserving income, and it strengthens the company's position because a still-employed executive owes enforceable duties. Key negotiation points include its length and whether it offsets any post-employment non-compete.

Can a company take my equity if I go to a competitor?

Often, yes, through a forfeiture-for-competition clause. These provisions forfeit unvested or even vested equity, deferred compensation, or severance if you compete, without the company needing a court injunction. Some courts uphold them under the employee-choice doctrine without full reasonableness review, while others scrutinize them as restraints of trade. The equity plan and deferred-comp documents must be read alongside the non-compete.