Laid Off With a Non-Compete? What Ohio Law Actually Says

The call usually starts the same way. Someone has been laid off in a reduction, or told on a Tuesday that the role is being eliminated, and somewhere in the paperwork is a non-compete they signed years ago and had not thought about since. The question that follows is almost always framed as a statement. They fired me, so it cannot still apply.

It is a reasonable instinct and it is not Ohio law. The rule people expect, that an employer who ends the relationship forfeits the right to restrict where you work next, does not exist here. That does not mean a laid-off employee has nothing to work with, but the arguments that actually carry weight in Ohio are different from the one most people arrive with, and knowing which is which changes what you should do in the first week.

The Rule Most People Expect Does Not Exist in Ohio

Ohio evaluates non-competes under Raimonde v. Van Vlerah, 42 Ohio St.2d 21 (1975), which asks whether the restraint is no greater than required to protect the employer, whether it imposes undue hardship on the employee, and whether it is injurious to the public. The nine considerations Ohio courts draw on, carried into Raimonde from Extine v. Williamson Midwest, Inc., 176 Ohio St. 403 (1964), run to limits of time and space, whether the employee was the sole contact with customers, access to confidential information or trade secrets, whether the covenant suppresses ordinary competition or unfair competition, whether it stifles the employee's inherent skill, proportionality of benefit to detriment, whether it bars the employee's sole means of support, whether the talent at issue was developed on the job, and whether the forbidden work is merely incidental.

Nothing in that list asks who ended the employment. Ohio courts have taken the same view in practice. In Ohio Urology, Inc. v. Poll, 72 Ohio App.3d 446 (10th Dist. 1991), the parties disputed whether the physician had been terminated or had left on his own, and the court treated the dispute as beside the point before remanding for an ordinary reasonableness analysis. More recently, in Adena Health System v. Cohen, 2026-Ohio-2697 (4th Dist. 2026), physicians who were fired and escorted out still found their one-year covenant running from the date of termination, and the court rejected their request for damages for having complied with it. In Maccarone v. Mark Mandell-Brown, M.D., Inc., 2025-Ohio-5071 (1st Dist. 2025), the fact that the physician had been let go for lack of productivity appears in the background of the opinion and plays no part in the reasonableness analysis, which cut the covenant down on ordinary overbreadth grounds instead.

Drafting closes the door further. Many agreements state that the restriction applies on termination for any reason, with or without cause, and Ohio courts have enforced covenants written that way. Some agreements go the other direction and set a shorter restricted period when the separation is not for cause, which is a bargained-for structure a court will honor. Both possibilities live in your document, which is the practical reason to read it before deciding what you believe.

Where the Layoff Does Matter

The separation is not irrelevant. It is simply evidence rather than a rule. A reduction in force can bear on undue hardship, particularly where the restriction would bar the only work the employee is trained to do, and it can bear on whether the restriction operates as a bar to the employee's sole means of support. Those are two of the considerations Ohio courts actually weigh, and a layoff can make both of them concrete in a way that a voluntary resignation does not.

Understand what that gets you. It is an argument about reasonableness, presented to a court that is balancing factors, rather than a defense that resolves the question at the outset. Framed honestly to a client, it means the layoff strengthens the case without deciding it.

The Better Argument Is That the Employer Lost the Interest

A restriction protects something. When the thing it protected is gone, the case for enforcing it weakens considerably, and this is where a layoff can do real work. In Premier Associates, Ltd. v. Loper, 149 Ohio App.3d 660, 2002-Ohio-5538 (4th Dist.), the employer wound up its business, terminated essentially all of its employees, and cancelled its customer contracts, then changed course and tried to enforce a covenant against a former employee. The court held that the right to enforce ends with the termination or abandonment of the business to which the covenant was ancillary, and observed that a covenant not to compete is not designed to protect an employer that summarily terminates its employees and cancels all its customer contracts but then changes its mind.

Read the reasoning carefully, because it is about the loss of a legitimate business interest rather than about the manner of anyone's discharge. That distinction is what makes it usable. If your layoff came as part of the employer exiting a line of business, closing the location you worked in, discontinuing the product you sold, or handing your accounts to a third party, the facts start to look like the ones that mattered in Loper. If the employer simply cut headcount and kept doing the same work with different people, they do not.

The Strongest Theory Is Usually the Employer's Own Breach

In practice the most productive question after a layoff is not what the employer did to end the job but whether the employer performed its own side of the bargain. Unpaid commissions, a severance obligation the employer did not honor, promised equity that never vested, a bonus withheld on a pretext, all of these are potential material breaches, and a party that fails to perform its own material obligation has a harder time enforcing the contract against the other side.

The federal court applying Ohio law in Klaus v. Hilb, Rogal & Hamilton Co. of Ohio, 437 F. Supp. 2d 706 (S.D. Ohio 2006), refused to grant the employer summary judgment on exactly this point, holding that whether the restrictive covenant was enforceable required first resolving the employee's claim that the employer had breached. What made the argument available was a gap in the drafting. The agreement contained no language making the covenant independent of the contract's other provisions, so the court could not conclude the parties had intended the restriction to survive the employer's own first breach.

That gap is the whole ballgame, and it is the first clause to look for. A well-drafted agreement states that the restrictive covenants are independent of every other provision and remain enforceable notwithstanding any claim the employee may have against the company. Where that sentence is present, the prior-breach theory gets much harder. Where it is absent, an employer that stiffed you on the way out has handed you something worth using.

Reformation Cuts Against You

One more expectation worth correcting. In many states an overbroad restriction fails entirely. Ohio abandoned that approach in Raimonde, which held that a covenant imposing unreasonable restrictions will be enforced to the extent necessary to protect the employer's legitimate interests and that courts are empowered to modify the agreement to reach that result. The Ohio Supreme Court did exactly that in Rogers v. Runfola & Associates, Inc., 57 Ohio St.3d 5 (1991), modifying the restrictions as to space and time rather than voiding them, and appellate courts continue to do so, as in MetroHealth System v. Khandelwal, 2022-Ohio-77 (8th Dist.), where a two-year restriction was reduced to one.

The practical consequence is that a covenant that looks absurd on its face is a candidate for judicial rewriting, not for automatic invalidation. Assuming a court will throw the whole thing out and taking the new job on that basis is how people end up litigating from a worse position than they needed to.

Where the FTC Rule Ended Up

The Federal Trade Commission's 2024 rule, which would have barred most worker non-competes nationwide, never took effect. It was set aside before its September 2024 effective date in Ryan LLC v. Federal Trade Commission, 746 F. Supp. 3d 369 (N.D. Tex. 2024), on the ground that the Commission lacked authority to issue it. On September 5, 2025, the Commission voted to dismiss its appeals and accede to the vacatur, which ended the rule as a live prospect. There is no federal ban and no rule-based defense for an employee to invoke.

What continues is targeted enforcement under Section 5 of the FTC Act. The Commission brought an action in September 2025 against a pet cremation company over one-year nationwide non-competes covering roughly 1,800 workers, finalizing the order that November, entered a consent order in December 2025 over no-hire agreements, and in April 2026 proposed a consent order against a national pest control company over two-year restrictions covering more than eighteen thousand workers while sending warning letters to thirteen others in the same industry. That activity is agency enforcement rather than a private right of action, so it does not give an individual employee a claim, though it does signal how sweeping restrictions on ordinary workers are viewed.

At the state level, Ohio Senate Bill 11 of the 136th General Assembly would broadly bar worker non-competes. It was introduced in January 2025, referred to the Senate Judiciary Committee, and had several hearings. It has not been enacted, and until it is, Ohio non-compete law remains entirely a matter of common law.

What to Do in the First Week

Start with the document. Find the executed agreement, read the restricted period and the geographic and activity scope as written rather than as remembered, and look specifically for the independence clause described above and for any provision that changes the restriction based on how the employment ended. Then look at the severance paperwork, if there is any, because employers frequently use a separation agreement to reaffirm, extend, or expand a covenant that was weaker in the original. Signing severance without reading the restrictive covenant section is one of the more common ways a laid-off employee makes their position worse, and it is worth understanding what your options are if you have already signed.

After that, gather the facts that go to interest and hardship. Whether the employer is still in the line of business the covenant protects, whether your accounts were reassigned or abandoned, what you were actually paid and whether anything was left unpaid, and what work you are realistically qualified to do if the restriction is enforced as written. Avoid the two moves that create problems regardless of the merits, which are taking any employer documents or data with you, and telling a prospective employer nothing about the agreement and letting them find out later.

The Bottom Line

A layoff does not release you from an Ohio non-compete, and any analysis that starts there is starting in the wrong place. The questions that matter are what the covenant actually says, whether the employer still has something legitimate to protect, whether the employer performed its own obligations, and how much of the restriction a court would leave standing after it finished narrowing it. Those are document-and-facts questions, and they are answerable fairly quickly once someone reads the agreement alongside what happened.

Frequently Asked Questions

Does being laid off void a non-compete in Ohio?

No. Ohio has no rule tying enforceability to who ended the employment, and the manner of separation is not among the factors Ohio courts weigh under Raimonde v. Van Vlerah. A layoff can support arguments about undue hardship and about whether the employer still has a legitimate interest to protect, but it does not release you on its own.

Can my employer enforce a non-compete after firing me without cause?

Generally yes, subject to the ordinary reasonableness analysis. Many agreements state that the restriction applies on termination for any reason, with or without cause, and Ohio courts have enforced covenants written that way. Some agreements set a shorter restricted period where the separation is not for cause, so the answer often turns on the specific language you signed.

What is the strongest argument against an Ohio non-compete after a layoff?

Usually one of two. The first is that the employer abandoned the business the covenant protected, which is what the Fourth District addressed in Premier Associates, Ltd. v. Loper. The second is that the employer materially breached the agreement first, by failing to pay commissions, severance, or promised equity, an argument the court allowed to proceed in Klaus v. Hilb, Rogal & Hamilton Co. of Ohio.

Will an Ohio court throw out a non-compete that is too broad?

Not usually. Ohio abandoned the all-or-nothing approach in Raimonde and courts are empowered to modify an unreasonable covenant and enforce it to the extent necessary to protect the employer's legitimate interests. The Ohio Supreme Court did that in Rogers v. Runfola & Associates, and appellate courts continue to narrow rather than void. Assuming a restriction will simply fail is a risky basis for taking a new job.

Is there a federal ban on non-competes?

No. The FTC's 2024 rule was set aside before its effective date in Ryan LLC v. Federal Trade Commission, and in September 2025 the Commission voted to dismiss its appeals and accede to that vacatur. The FTC continues to bring individual enforcement actions under Section 5 of the FTC Act, but that is agency enforcement rather than a claim an individual employee can bring.