Lake Land Employment Group of Akron v. Columber

Supreme Court of Ohio · Contracts

ContractsNoncompetition agreementsConsiderationAt-will employmentconsiderationat-will employmentnoncompetecontinued employment

Facts

Columber worked for Lake Land from 1988 until 2001 in an at-will employment relationship. In 1991, after employment had already begun, he signed a noncompetition agreement providing that for three years after termination he would not engage in a competing business within a 50-mile radius of Akron. Columber testified that he read and signed the agreement after it was presented to him, and the parties' at-will relationship continued for ten more years. After his discharge in 2001, he formed a corporation engaged in a business similar to Lake Land's, and he defended on the ground that the covenant lacked consideration.

Issue

Is continued at-will employment, standing alone, sufficient consideration to support a covenant not to compete entered into after an employee has already begun work? More specifically, does an employer's forbearance from terminating an at-will employee supply consideration when the employee assents to new noncompetition terms?

Rule

Consideration exists to support a noncompetition agreement when, in exchange for the assent of an at-will employee to a proffered noncompetition agreement, the employer continues an at-will employment relationship that could legally be terminated without cause. The validity of such an agreement on consideration grounds is distinct from whether the covenant is reasonable and therefore enforceable.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nina Patel had worked as an at-will sales manager for Cedar Harbor Staffing in Cleveland, Ohio, for three years when the company presented her with a new noncompetition agreement. She signed it, received no raise or promotion, and remained employed for another 18 months before resigning to join a competitor.

If Nina argues the covenant is unenforceable solely because she received no new pay or benefits when she signed, which is the strongest response?

Explanation. The majority held that when an at-will employer presents a noncompetition agreement to an at-will employee, the proposal operates as a renegotiation of employment terms. If the employee assents and the employer continues an at-will relationship it had the legal right to terminate, that forbearance is sufficient consideration. The court rejected the notion that additional compensation or a definite term of employment is required to satisfy consideration.