As state and federal government policy positions on non-compete agreements continue to evolve, they could have a direct impact on how your agency operates. Changes in legislation or regulations could affect whether your agency can enforce non-competes, potentially influencing client relationships and business strategy. This article will provide an update on the current legal landscape of non-compete agreements at both the state and federal levels.  

Ohio Legislative Update  

Legislative action on non-compete agreements is being debated in our state. Ohio Senators Louis Blessing (R) and Bill DeMora (D) introduced Senate Bill (SB) 11, legislation that would prohibit employers from enforcing non-compete clauses that restrict workers from accepting employment post-termination. 

The Bill includes the following restrictions on non-compete agreement: SB 11 would prohibit an employer from entering into an agreement that restricts a worker from accepting work with another person or operating a business after the conclusion of their relationship. This provision alone would overturn long established case law validating the use of non-compete covenants. In addition, the legislation states, non-compete agreements are null and void as a matter of public policy if it: 

• Prohibits a worker from working for another employer for a specified period, within a specified geographic area, or in a similar capacity to their previous work. 

• Requires a worker to pay for lost profits, lost goodwill, or liquidated damages if they terminate the relationship. 

• Imposes a fee or cost on the worker for terminating the work relationship, including a replacement hire fee, a retaining fee, reimbursement for immigration or visa-related costs, or a bondage fee. 

• Requires a worker to reimburse the employer for expenses incurred during the relationship for training, orientation, evaluation, or other services intended to provide the worker with skills to perform the work or improve performance. 

If enacted into law, SB 11 would make Ohio one of a few states to broadly prohibit non-compete agreements. Currently, 4 states ban non-competes: California, Minnesota, North Dakota, and Oklahoma. 

The bill is currently pending in the Senate Judiciary Committee. The legislation has received two hearings, a sponsor testimony and proponent testimony. OIA is working with our Advocacy Committee to determine our position on the legislation.  

It is important to note that this legislation does not speak to non-solicitation or non-piracy restrictive covenants. Most agencies have come to rely on these provisions more so than non-compete agreements. OIA highly recommends that agencies implement employment agreements that include non-solicitation and non-piracy restrictions with all of their employees.  

While this newly introduced legislation is pending in Ohio, the ban on non-competes is still being litigated throughout the federal court system.  

Federal Update 

Non-compete agreements in the United States have seen significant regulatory initiatives and legal challenges. In April 2024, the Federal Trade Commission (FTC) introduced a rule aiming to ban most non-compete agreements, citing concerns that such agreements restrict worker mobility and suppress wages. This rule passed with a 3-2 vote from the Commission and was set to go into effect on September 4, 2024. 

However, in August 2024, a federal judge in Texas blocked the FTC’s rule. The judge ruled that the agency lacked the authority to enforce such a broad ban. The court’s decision halted the nationwide implementation of the rule. Following this decision, the FTC filed an appeal on October 18, 2024, to the US District Court of Appeals for the 5th Circuit. 

That raises the question: what is the status of non-compete agreements? On a federal level, the issue remains under debate. The 5th Circuit Court of Appeals has not provided a decision on this issue. With a new presidential administration, it remains to be seen if the FTC will continue to pursue the rule aiming to ban non-competes. President Trump designated Andrew N. Ferguson as the New Chairman of the Federal Trade Commission on January 20, 2025. Chairman Ferguson was formerly a Commissioner at the FTC and had voted against the rule banning non-competes.  

Conclusion 

As the debate over non-compete agreements continues, it is important for agencies to stay informed about potential legislative and regulatory changes that could impact operations. These decisions may impact future employment agreements and business strategies within the industry. OIA is monitoring these changes and ensuring that you and your agency have the latest information to navigate any changes effectively. Please contact George Christy at George@ohioinsuranceagents.com to share your thoughts on SB 11.  

About the Author:

George Christy joined the Ohio Insurance Agents (OIA) as the new Government Affairs Manager, starting on January 6, 2025. George brings experience from his previous roles at the Ohio Department of Transportation (ODOT). At ODOT, he was part of the communications team, and he worked on legislative and regulatory issues with the Legislative Affairs team. George brings experience from his work on state legislative campaigns, his time as a Legislative Aide in the Ohio House of Representatives, and his roles at a state agency. George grew up in Delaware County and is a graduate of The Ohio State University where he studied Political Science and Economics.