How do courts view non-compete agreements if the employee’s company wasmerged into a larger corporation?

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How do courts view non-compete agreements if the employee’s company wasmerged into a larger corporation?

The employee was severed and was not offered a position with the larger (parent) organization. A severance was paid. A 2 year non-compete agreement was signed 3 years ago. Employee has documentation from officer’s from the former sister company stating that employee would be free to work within their industry following separation.

Asked on October 5, 2010 under Employment Labor Law, Kentucky

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Take allagreements to an employment attorney in the Kentucky area to review in light of Kentucky law.  Kentucky courts uphold the validity of non-compete's in light of certain factors: reasonableness, protection of an employer's legitimate interest, etc., and have upheld them nationwide as well as locally.  So, you need to see if the the latter document in any way "invalidates" the former document as to you and the company that you worked for, or if the merger did so (see if the merger agreement invalidates all former agreements or incorporates all former agreements).  Also, the severence may have an effect as well but I would not count on that factor so greatly.  Good luck to you. 


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