Ohio’s Senate Bill 11 is Aiming to Ban Non-Competes

By Ami J. Patel and Stephen S. Zashin*

Although the Federal Trade Commission’s proposed rule banning non-compete agreements remains stuck in political limbo, states have, in recent years, begun passing or strengthening laws which ban or restrict these clauses. Now Ohio may soon follow suit, as its Senate is considering a total ban on non-compete agreements.

The Bill as Introduced

Senate Bill 11 was introduced by Ohio Senators Louis W. Blessing, III (R) and William P. DeMore (D) on January 22, 2025. Its proposed language prohibits employers from requiring or enforcing any agreement that restricts or penalizes “workers” (defined broadly to include employees, independent contractors, interns, and volunteers) for seeking or accepting new employment or operating a business after their employment ends. This includes agreements that:

• Prevent workers from working for another employer for a specific period, within a certain geographic area, or in a role similar to their previous position.
• Require workers to pay lost profits, lost goodwill, or liquidated damages if they terminate the employment relationship.
• Impose a fee or cost—such as a replacement hire fee, retraining fee, or reimbursement for immigration or visa-related costs—when workers choose to leave.
• Demand reimbursement for expenses (e.g., training, orientation, or evaluation) that were intended to provide or improve the worker’s skills during employment.

Notably, Senate Bill 11 includes no exception related to the sale of a business.

Additionally, the proposed Bill voids any agreement entered into, modified, or extended on or after its effective date which requires a worker who primarily resides and does business in Ohio to adjudicate claims outside Ohio or deprives them of any of the State’s substantive legal protections. However, the Bill does provide an exception for this if, at the time of negotiation, the worker is independently represented by legal counsel (not chosen or paid by the employer) and the worker personally designates the venue or forum for any dispute or the governing law.

In terms of penalties, Senate Bill 11 permits workers or prospective workers to bring a civil action against an employer for any violation, with the possibility of recovering costs and reasonable attorney’s fees, actual damages, punitive damages up to five thousand dollars, and injunctive relief. A worker or prospective worker may also file a complaint with the attorney general or the director of commerce. If the attorney general or director investigates and determines that a violation likely occurred, the attorney general may bring an action on behalf of the worker or prospective worker, and if successful, the court must award the same remedies to the attorney general.

As of this Article’s writing, Senate Bill 11 has been referred to the Ohio Senate’s Judiciary Committee, where it will go through debate and amendment. The first hearing on the Bill is scheduled for February 12, 2025. Anyone looking to testify before the Committee in regard to the Bill should begin that process now.

What Now for Employers

If the Bill is enacted, Ohio will join the growing group of states that have effectively banned non-compete agreements, with Minnesota being the most recent to do so in 2023. The Bill’s current language is notably strict, lacking any salary thresholds and containing no provision for grandfathering existing agreements. Its prohibition on “enforcement” makes clear that any previously signed non-competes would be rendered unenforceable once the legislation takes effect.

While the Bill moves through the legislative process, employers should remain vigilant and start reviewing their existing agreements in preparation for what may be a sweeping overhaul of restrictive covenants in Ohio. If the Bill becomes law, any attempt to enforce a non-compete once it takes effect will result in significant legal and financial consequences. As a result, employers will likely need to invest substantial effort in devising new ways to protect their business interests, trade secrets, and client relationships without relying on non-compete restrictions. It is critical to consult legal counsel now to evaluate existing contracts, explore alternative protective measures, and develop contingency plans in anticipation of Senate Bill 11’s potential enactment.

Zashin & Rich will continue monitoring Senate Bill 11 as it progresses and stands ready to assist employers with strategic guidance and compliance.

*Ami Patel is Z&R’s Practice Leader for Trade Secrets/Non-competes. She works extensively in trade secret and restrictive covenant litigation. Stephen Zashin is Z&R’s Managing Partner and also has worked extensively representing clients in trade secret and restrictive covenant litigation. Ami and Stephen have brought numerous trade secret cases to verdict. For more information on matters concerning Senate Bill 11 or non-compete agreements generally, contact Ami J. Patel (ajp@zrlaw.com) or Stephen S. Zashin (ssz@zrlaw.com) via email or by phone at 216.696.4441.

Legislative Update: New Legal Requirements and Protections for Employers

By Ken Hurley*

In January 2025, Governor Mike DeWine signed more than two dozen bills into law. These bills spanned a wide array of topics, from changes to Ohio’s Public Records Law to updating penalties for certain criminal offenses. Of these newly enacted laws, employers may be particularly interested in two specific items.

The Paystub Protection Act

House Bill 106, dubbed the Paystub Protection Act, enacts Section 4113.14 of the Ohio Revised Code. The Act requires employers to provide its employees with a statement of the employee’s wages and deductions for each pay period. Those statements must include the employee’s name and address, the employer’s name, the total gross wages and net wages earned by the employee over that pay period, the amount and reason for each deduction from the employee’s wages, the dates of the pay period and payday, and, for hourly employees, the total number of hours worked during the pay period, the hourly wage for the employee, and any hours worked over 40 hours in a workweek. Violations of this act do not carry legal liability alone, but employers should nevertheless ensure that their payroll practices comply with the Act’s requirements.

The Uniform Public Expression Protection Act

Senate Bill 237, also known as the Uniform Public Expression Protection Act, enacts Chapter 2747 of the Ohio Revised Code. The new Chapter provides immunity from lawsuits based on a person’s constitutionally protected speech, assembly, association, and press on matters of public concern. Public employers should take special note of these new protections, as the law also applies to communications made in legislative, executive, or administrative proceedings. The extent of these protections is not yet known, and the outer limits of these protections will likely be the subject of litigation in the coming years. Employers may be able to invoke these protections in certain actions to receive an early dismissal of cases against them. While these protections do not apply to every claim asserted against an employer, the Act provides necessary safeguards against the abuse of the legal process.

*Ken Hurley represents public and private employers in all facets of labor and employment law. If you have questions about these changes to Ohio law or any employment or labor law questions, please contact Ken at kjh@zrlaw.com or (614) 224-4411.

DEAD ON ARRIVAL: Federal Affirmative Actions Plans Ended

By Scott DeHart and Ken Hurley*

With the stroke of a pen, President Trump demolished a sixty-year cornerstone of federal anti-discrimination law that required federal government contractors to prepare and adhere to affirmative action plans.

The Executive Order titled “ENDING ILLEGAL DISCRIMINATION AND RESTORING MERIT-BASED OPPORTUNITY” was signed by the President on the evening of his first full day in office, Tuesday, January 21st. Among other changes, the EO formally revokes “Executive Order 11246 (Equal Employment Opportunity)” which was signed by President Lyndon B. Johnson on September 24,1965. EO 11246 has long prohibited federal contractors and federally assisted construction contractors and sub contractors, who do over $10,000 in Government business per year, from discriminating in employment decisions on the basis of race, color, religion, sex, gender identity or national origin. EO 11246 also imposed the requirement on such contractors to take affirmative action to ensure that equal opportunity is provided in all aspects of their employment. President Barack Obama in 2014 amended that order via Executive Order 13672, which added “sexual orientation or gender identity” to the list of protected classes.

The Office of Federal Contract Compliance Programs (OFCCP), an agency within the United States Department of Labor (DOL), has been the federal entity primarily responsible for ensuring that employers comply with EO 11246. OFCCP also enforces Section 503 of the Rehabilitation Act of 1973, which provides disability protections for federal workers, and the Vietnam Era Veterans Readjustment Assistance Act of 1974. OFCCP has promulgated and enforced its detailed regulations, requiring federal contractors to prepare and follow annual “affirmative action plans.” The revocation of EO 11246 substantially curtails the authority and the scope of responsibilities of the OFCCP.

“The [OFCCP]……shall immediately cease: Promoting ‘diversity’; holding Federal contractors and subcontractors responsible for taking ‘affirmative action’; and allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin,” Trump’s order reads.

Sweeping changes to federal-level affirmative action and DEI programs were widely anticipated after Trump’s electoral victory in November 2024. During the first Trump administration (2017-2021), many had predicted the demise of OFCCP and the downfall of EO11246. However, OFCCP remained active during Trump’s presidency, instituting new types of audits and issuing new Directives and regulations that were widely seen as contractor-friendly. Many of these efforts were predictably rescinded at the outset of the Biden administration. This time, President Trump has taken more immediate and decisive action, essentially obliterating the OFCCP. Trump’s order came just a day after he rescinded multiple Biden-era executive orders, including several others pertaining to diversity and affirmative action.

The impact of Trump’s rescission of EO 11246 (and subsequent EOs that modified and expanded it) is enormous. President Trump has given contractors 90 days to continue their compliance with the existing regulatory scheme, but the recission of EO 11246 all-but certainly marks the end of mandatory “affirmative action plans” for federal government contractors (for at least the next four years). President Trump’s EO also requires each federal government contractor “to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”

President Trump’s Executive Order may present a lose-lose decision for government contractors. While his Order effectively renders a contractor’s affirmative action plan or DEI policy unlawful, Ohio law still requires contractors to develop affirmative action plans. Section 153.59 of the Ohio Revised Code prohibits the Department of Development from expending capital funds appropriated by the General Assembly unless the project to receive those funds develops an affirmative action plan. Specifically, the statute requires contractors to develop “an affirmative action program for the employment and effective utilization of disadvantaged persons whose disadvantage may arise from cultural, racial, or ethnic background, or other similar cause, including, but not limited to, race,religion, sex, disability or military status as defined in section 4112.01 of the Revised Code, national origin, or ancestry.” Section 125.111 of the Revised Code implements the same requirements for contracts with cities, villages, counties, townships,and any other political subdivision. President Trump’s order creates a dilemma for businesses that work on government contracts: their affirmative action efforts, which will still be necessary to comply with state contracts, will likely place these contractors into noncompliance with their federal contracts.

Employers who do business with the federal government should remain attentive to the fast-paced and sweeping changes that are underway in the early days of the second Trump presidency.

*Scott DeHart represents public and private sector employers in all aspects of labor and employment law including employment discrimination, collective bargaining, union avoidance and affirmative action plans. Ken Hurley represents public and private employers in all facets of labor and employment law. For assistance in navigating the landscape of affirmative action, DEI, and anti-discrimination law at the federal and state levels, contact Scott DeHart (shd@zrlaw.com) or Ken Hurley (kjh@zrlaw.com) at 614-224-4411.

NLRB Cracks Down on Employer “Captive Audience” Meetings

By George S. Crisci*

In a decision released last week, the National Labor Relations Board (“NLRB) jettisoned nearly eight decades of its own precedent, ruling that an employer violates the National Labor Relations Act when it requires its employees — under threat of discipline or discharge — to attend meetings in which the employer expresses its views on unionization. In holding that these so-called “Captive Audience” meetings are unlawful, the Board unceremoniously discarded a 76-year precedent established by Babcock & Wilcox Co., 77 NLRB 577 (1948).

The Board’s hotly anticipated decision in Amazon.com Services LLC, represents a forceful crack-down on one of the most effective and commonly used tactics by private sector employers who face a union organizing drive. For decades, these “captive audience” meetings have been a fixture of union elections – an opportunity and forum in which employers can express their view of the potential negative effects that unionizing may have on the general workforce. The Board’s decision comes on the heels of a significant ruling earlier this month in Siren Retail Corp., NLRB Case No. 19-CA-290905, in which the Board overturned a nearly 40-year precedent and held that employers are no longer permitted to categorically tell workers that unionization will negatively impact their relationship with management.

The Board majority explained that captive audience meetings violate Section 8(a)(1) of the NLRA because they have a reasonable tendency to interfere with and coerce employees in the exercise of their collective bargaining rights. However, the Board majority explained that employers can still lawfully hold meetings with workers to express the employer’s views on unionization if certain guardrails are in place: (1) the workers must have advance notice of the subject of the meeting, (2) attendance must be voluntary with no adverse consequences for failure to attend, and (3) no attendance records of the meeting may be kept. The Board majority also made clear that its decision applies only prospectively, clearly a recognition that employers have reasonably relied on the Babock & Wilcox standard and the numerous NLRB decisions upholding “captive audience” meetings as permissible for nearly eight decades.

NLRB General Counsel Jennifer Abruzzo first identified “captive audience” meetings as a violation of NLRA rights in a memo issued in April 2022, signaling her intention to challenge this practice in proceedings before the Board and to ask the Board to overrule Babcock & Wilcox. Last week’s decision marks the culmination of GC Abruzzo’s efforts.

However, with the impending inauguration of President-elect Donald J. Trump on January 20,2025, GC Abruzzo’s service as the NLRB General Counsel – and her triumph today over “captive audience” meetings – are likely to be short-lived. President Biden unceremoniously terminated GC Abruzzo’s predecessor, Peter Robb, on the very afternoon of his presidential inauguration, January 20, 2021. Absent GC Abruzzo’s resignation, history is likely to repeat itself and bring a swift end to GC Abruzzo’s tenure.

Although GC Abruzzo’s successor will undoubtedly identify today’s decision on his or her agenda and ask that it be reconsidered and reversed by the Board, employers should not expect an immediate return to the Babcock & Wilcox standard in January 2025 and possibly not until after August 2026. The expirations of the five-year terms of current Board members are staggered on an annual basis, and a reversal of today’s decision will depend on new appointments by the President altering the composition of the current Board. One Board seat (held by Chair McFerran) expires next month, and President Biden has nominated her for reappointment during the current lame-duck Congress. If the Senate approves her reappointment, then the earliest that the Board composition could change from a Democratic to a Republican majority would be August 2026 because the seat that expires in 2025 is held by the only Republican Board member. If the Senate fails to reappoint Chair McFerran, then majority control could switch during the first few months of next year, when President Trump would nominate (and the Republican-majority Senate likely would confirm) replacements for the seat currently held by Chair McFerran and another vacant seat formerly held by John Ring. After that, it will take a period of time that cannot be accurately quantified for the new Republican-majority Board to identify a suitable pending case to issue a decision that reverses the Board’s decisions.

Until the Board (hopefully) restores its Babcock & Wilcox standard, employers are well-advised to refrain from holding “captive audience” meetings. Employers are still free to communicate with employees about the downsides of unionization and to express their views about organizing drives; however, employees must have advance notice of the topic of such meetings, attendance must be voluntary, and no attendance records may be kept.

*If you have questions relating to these recent NLRB decisions and the changed prohibited employer actions, please contact Zashin & Rich’s experienced Labor attorneys: George Crisci (gsc@zrlaw.com) at (216) 696-4441, and Jonathan Downes (jjd@zrlaw.com) or Scott DeHart (shd@zrlaw.com) at(614) 224-4411.

Texas Court Vacates DOL 2024 Salary Threshold Rule Nationwide

By Michele L. Jakubs*

The United States District Court for the Eastern District of Texas vacated the Department of Labor’s (“DOL”) 2024 Rule that would have rendered millions of executive, administrative and professional employees nonexempt on January 1, 2025. The DOL 2024 Rule would have increased the salary threshold required for the most commonly used exemptions under the FLSA. Employees are exempt from overtime if they are paid on a salary basis and meet the duties requirements for one of these exemptions: executive, administrative, or professional.

The Court, in Texas v. DOL, previously issued a preliminary injunction preventing the DOL from enforcing the July 1, 2024 salary increase ($844 per week) for Texas as an employer only. On Friday, the Court ruled that the DOL did not have the authority to enact a rule that essentially replaced the duties tests for exempt status with a salary test and vacated the DOL rule nationwide. The Court stated that the exemptions require “that an employee’s status turn on duties—not salary—and because the 2024 Rule’s changes make salary predominate over duties for millions of employees, the changes exceed the Department’s authority to define and delimit the relevant terms.” The Court went on to state: “When a third of otherwise exempt employees who the Department acknowledges meet the duties test are nonetheless rendered nonexempt because of an atextual proxy characteristic—the increased salary level—something has gone seriously awry.”

Ultimately, the Court vacated the DOL’s 2024 Rule in its entirety. The DOL may appeal the decision or issue a revised rule. For now, however, the salary threshold for the executive, administrative and professional exemptions remains at the pre-2024 level of $684 per week or $35,568 per year and at $107,432 per year for highly compensated employees.

*If you have questions relating to the DOL’s new rule, or any other labor and employment law issues, please contact Zashin & Rich’s Wage and Hour Practice Leader, Michele Jakubs (mlj@zrlaw.com) at (216) 696-4441.

DOL SERVED A LOSS: U.S. Court of Appeals Vacates DOL 80/20/30 Tip Rule

By Michele L. Jakubs*

The Fifth Circuit Court of Appeals, in a 3-0 decision, vacated the Department of Labor’s (“DOL”) 2021 Final Rule that restricted when an employer could apply a tip credit, finding it arbitrary and capricious. Under the Fair Labor Standards Act (“FLSA”), an employer may take a tip credit, paying tipped employees at a rate below the applicable minimum wage in anticipation of tips making up the difference. In 2021, the DOL issued a Final Rule limiting when an employer could utilize the tip credit to time for work that directly produced tips (i.e., work that directly supported tips provided that work did not exceed 20% of the work time and did not exceed thirty consecutive minutes). The Fifth Circuit found that the “Final Rule is attempting to answer a question that DOL itself, not the FLSA has posed. … The FLSA does not ask whether duties composing that given occupation are themselves each individually tip-producing.”

The Fifth Circuit stated that the “Final Rule replaces the Congressionally chosen touchstone of the tip-credit analysis – the occupation – with one of DOL’s making – the timesheet,” seemingly recognizing the insurmountable burden placed on employers of parsing each minute of time worked by a tipped employee to determine its applicable category. The issue is “only whether the employee is engaged in an occupation in which he receives tips.”

The Fifth Circuit’s decision vacating the Final Rule allows employers to apply the tip credit as intended by Congress – to employees engaged in an occupation in which the employee receives tips. If the employee is performing duties unrelated to that occupation, such as a server fixing the plumbing in a restaurant, however, the employee must receive at least the full minimum wage.

*If you have questions relating to the DOL’s new rule, or any other labor and employment law issues, please contact Zashin & Rich’s Wage and Hour Practice Leader, Michele L. Jakubs (mlj@zrlaw.com) at (216) 696-4441.

UPDATE: Texas Court Prohibits Enforcement of FTC’s Non-Compete Ban Rule Nationwide

By Ami J. Patel and Kimana A. Bowen*

As you know based on our prior Alerts, the Federal Trade Commission issued a purported Rule banning employers from enforcing non-competes against “workers” with some limited exceptions. The FTC Rule was set to go into effect on September 4, 2024. However, there have been several court challenges to the FTC’s authority and the validity of the Rule.

The Texas Court Prohibits Enforcement of the Rule

On August 20, 2024, the United States District Court for the Northern District of Texas issued a decision against the FTC, prohibiting the enforcement of the FTC’s Rule—nationwide. The court agreed with the Plaintiffs in Ryan LLC, et al v. Federal Trade Commission, finding that Plaintiffs are entitled judgment on their claims under the Administrative Procedure Act (“APA”) and the Declaratory Judgment Act because: (1) the FTC lacks authority to create substantive rules; and (2) the FTC’s rule is arbitrary and capricious since it is overbroad, a one-size-fits-all, with no end date and fails to consider alternatives and the benefits of non-competes.

Because the Texas Court concluded that the FTC exceeded its statutory authority and that the FTC Rule is arbitrary and capricious, under APA § 706(2)(A)–(C), the Texas Court must “hold unlawful” and “set aside” the FTC’s Rule. According to the Texas Court, the APA has nationwide effect because it is “not party-restricted,” and “affects persons in all judicial districts equally.” As such, the Texas Court’s decision applies nationwide and is not limited to just the Plaintiffs in the Texas case.

While the September 4, 2024 effective date for the FTC Rule is set aside, we anticipate that the FTC will challenge this decision.

Florida’s Recent Ruling on the FTC Non-Compete Ban Rule

The Texas court ruling comes just days after a Florida Federal District Court also preliminarily enjoined the FTC from enforcing its Rule on non-competes against a real estate broker. The Florida Court found that the FTC will not face substantial harm if the status quo is maintained until a final decision on the Rule’s validity is made and that there was a substantial likelihood of success based on the “major questions doctrine.”

The major questions doctrine asserts that when an agency claims authority to issue rules of extraordinary economic and political significance, it must point to “clear congressional authorization” for such power. The court concluded that, given the Rule’s extensive application, including its purported application to existing contracts, it is “substantially likely that the rule presents a major question as defined by the Supreme Court.”

What Now for Employers

Sit Tight. For now, employers have a good-faith basis that the Rule will not go into effect on September 4, 2024. However, employers should use this issue as an opportunity to assess whether their current agreements protect their business, information, and interests as desired. Employers should work with experienced trade secret and non-compete lawyers to evaluate whether their workers have well-drafted agreements in place and to revise stale ones.

*Please contact Z&R’s Practice Leader of its Non-Compete/Trade Secret practice, Ami J. Patel (ajp@zrlaw.com) at 216-696-4441 or Kimana A. Bowen (kab@zrlaw.com), if you have any questions about the effect of these decisions on the FTC’s purported Non-Compete Rule or need assistance with review of your existing documents or how to draft new agreements.