On April 30, the Court of Appeals in Hamilton County upheld a non-compete agreement prohibiting Michael E. Bustle from competing with Mitchell’s Salon & Day Spa, Inc. for a period of one year.
Mr. Bustle was hired at Mitchell’s, a high-end beauty salon in the greater Cincinnati area, soon after graduating from cosmetology school. At the time he was hired, he had no clients of his own. Upon being hired, Bustle signed an agreement prohibiting him for one year after the end of his employment with Mitchell’s from rendering any hair care treatment, hair care styling, or related services to any persons who are or were customers of Mitchell’s and with whom Bustle had personal contact during the time of his employment.
On August 10, 2007, after 12.5 years of employment with Mitchell’s, Bustle resigned from Mitchell’s and opened his own hairstyling business in Montgomery, Ohio.
After finding that Bustle had violated the non-compete agreement, the trial court granted an injunction enforcing the agreement and prohibiting him from providing beauty services to any person with whom he had previously provided services while employed at Mitchell’s.
Mitchell’s and Bustle then reached a settlement requiring Bustle to follow the non-compete agreement and to send letters to Bustle’s former clients informing them he could no longer provide hairstyling services for them and recommending another stylist at Mitchell’s.
Even after the court’s ruling and the settlement, Bustle continued to violate both the court’s order and the agreement. As a result, the court ordered Bustle to pay attorney fees, investigative fees and lost profits to Mitchell’s equaling $139,521.
While many non-compete agreements may not be enforceable, this particular agreement was enforceable because a legitimate business interest existed for the former employer to protect. The clear error on the part of the former employee was in violating the court’s order.
Finally, although this case did not focus on the usual aspects of evaluating non-compete agreements – whether the agreement was reasonable in the amount of time and in geographic scope – it is important to note that agreements that are unreasonable for either of these reasons can be challenged.
Employees who sign non-compete agreements are not left without any options, but as long as the non-compete agreement is reasonable, it is important to comply. Of course, if you have questions about whether a non-compete is enforceable, you should consult with an attorney knowledgeable in non-compete law.
Crumpton Law LLC is a Columbus Small Business Law Firm, with attorney Matthew Crumpton serving as managing member and lead attorney.
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