Can a non-compete be enforced if the business closes and then opens under a different name or if the contract is terminated?
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Can a non-compete be enforced if the business closes and then opens under a different name or if the contract is terminated?
My husband is a dentist working for another dentist who owns their own practice. My husband has a contract that has a 6 month non-compete. There is a 90 day clause for either party to give notice.
Asked on May 25, 2012 under Employment Labor Law, Connecticut
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
For a definitive ansewr, you need an attorney to review the precise language of the agreement; a non-compete agreement is a contract, and like any contract, the specific language controls.
That said, a non-compete generally cannot be enforced if the employer terminates the employee (e.g. fires him or her), which includes terminating the employee as part of a downsizing, restructuring, business closure, or general layoff.
On the other hand, if the employee's employment has continued, even if the name of the business has changed, the non-competition agreement would generally still be in force.
And if the employee quits or resigns, he or she would be subject to the terms of the non-competition agreement.
So, in sum: if the employment ended due to something the employer did, the agreement would typically be terminated; if employment does not terminate, or the employee terminates it, it is enforceable.
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