Is my non-compete still enforceable if my company was bought out and I was laid off?

UPDATED: Sep 29, 2022

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Is my non-compete still enforceable if my company was bought out and I was laid off?

I was asked to come back to my company and I started 6 months ago. On the first day we were bought out by another company and the transaction finally took place last week. I was laid off today and will receive a small severance package. I originally signed a non compete with my original company and have not signed one for the new company. I have not completed training yet and my questions are. Does the non-compete hold up because I was laid off and if my severance is a lot less than the year I would need to be off for the non compete is that justifiable?

Asked on August 17, 2015 under Employment Labor Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

1 If you signed the non-compete before being laid off, and then did not sign a new one after being re-hired, the old one should no longer be binding on you because of the loss of employment. If the employer wanted to re-establish the non-compete, they should have had you sign a new one.
2 If you signed a non-compete when you returned, and the company you signed it with was not an LLC or corporation but was a sole proprietorship, then the agreement was with the former sole proprietor, not the new company, and so is not in enforceable by the new company.
3 If you signed a non-complete when you returned and you signed the agreement with an LLC or corporation, but the LLC or  corporation was not purchansed--the buyer only purchased the assets, not the business structure--then the ageement is with the old LLC or corporation, not the new company, and the new company may not enforce it.
Only if you signed the agreement when you returned with an LLC or corporation and the LLC or corporation itself was purchased, can the buyer enforce the agreement against you.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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