Can I work for a competitor since my company downsized and no longer has a position for me, if signed non-compete clause?

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Can I work for a competitor since my company downsized and no longer has a position for me, if signed non-compete clause?

Asked on June 6, 2012 under Employment Labor Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It depends on what you received in exchange for signing the non-competition clause (the "consideration" for the agreement):

1) If you didn't receive any additional payment or benefit, but "just" your employment (i.e. your employer told you that you had to sign), then if the employer terminates or lays you off, there is a lack or failure of consideration--you are no longer getting anything in exchange for your promise to not compete--and so the agreement would not be binding. This type of non-competition agreement would bind employees when they quit or resign, but not when fired or laid off.

2) If you were given some payment in exchange for signing--like severance, for example, or some bonus payment--then the agreement would still be enforceable against you if fired or laid off.

 


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