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Employee Benefits Law Report Reporting on recent trends and developments affecting employee benefits

Ohio Supreme Court Rules On The Enforcement of Non-Compete Agreements By The Surviving Company In A Merger

Posted in Executive Compensation

As discussed in our sister blog – Employer Law Report – the Ohio Supreme Court has ruled in a 4-3 decision that following a merger, the surviving company may not be able to enforce employees’ non-compete agreements where the agreements fail to obtain an assignment clause, and the time period of the employees’ non-competes began to run as of the date of the merger. It is too early to know the reach and impact of this ruling, but we can foresee that the Acordia rationale might be applied in other contexts. Accordingly, if you are involved with due diligence in a corporate merger, we encourage you to make certain that contracts and benefit plan documentation are reviewed to assure that the surviving entity is assuming full rights and responsibilities for all obligations of the constituent entity, including enforcement of such agreements on the same terms as the original corporate party.