If a company sells out and you signed a non-compete agreement, is it still valaid since I was not part of the acquisition?

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If a company sells out and you signed a non-compete agreement, is it still valaid since I was not part of the acquisition?

Asked on March 24, 2017 under Employment Labor Law, Iowa

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Basically, what you are asking is if a non-compete is still binding since you were laid off. Unfortunately, it probably is. A non-compete is a contractual agreement that is distinct and separate from the employment relationship, so the ending of that relationship has nothing to do with the enforceability of the non-compete (although it could be invalidated on other grounds - too broad in scope, too long in duration, etc.). Also, wrongful discharge could result in an non-compete being unenforceable but a reduction in force is not likely to be a determining factor in a finding of unenforceability. So while you may ask how can it be fair that a company fires someone and then sues them for breaching their non-compete, the answer is that it's not fair but it is legal since the employee agreed to those terms. However, these agreements are subject to specific state law, so you should consult directly with a local employment law attorney who can best advise you further.


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