Will my non-compete hold up if the business is sold and my position eliminated?

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Will my non-compete hold up if the business is sold and my position eliminated?

I was hired about a year ago as VP of Ops for a wholesale company. Customers are nationwide. I signed a non compete that says I cannot work for a company in our product category for 5 years. No geographic limits. We do not have an extremely unique product or process as evidenced by many competitors. The company is being sold and my position eliminated. I am discussing employment with a company in another state that is in the same general industry. Will the non-compete hold up?

Asked on August 28, 2012 under Employment Labor Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

For a definitive answer, you need to bring a copy of the noncompete to an employment law attorney to review with you--this is a contract, and like any contract, it's specific terms are critical to understanding that. That said, some general principals:

1) Courts can "blue pencil," or modify, agreements which are excessive in length or scope. They will not invalidate the agreements entirely, but will reduce them to reasonable and enforceable levels. A five-year exclusion is almost certainly far too long--typically, unless you were the owner and signed the non-compete as part of the sale of the business, the longest you'd be bound for under a non-compete is one year. But you can still be bound for one year.

2) Whether geographic limits or not are required depends on the business and its market--do they have geographic limits? For example: a realtor's non-compete would need to have geographic limits, since realtors' markets are themselves limited, but a non-compete for an Amazon.com exec would not be limited, since the company's market is not limited, either.

3) It does not matter whether the product and processes are unique or not--the non-compete is a contract, and if you signed it, it is enforceable.

4) Usually, IF you are terminated or laid off, the non-compete will not be enforceable due to a failure of consideration (the consideration for the agreement was your employment). But that is not universally true, and you need an attorney to evaluate the agreement and the circumstances.


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 AttorneyPages.com 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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