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socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 34117
Experience:  Retired (mostly)
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I am a contractor and have a contract with a placement company.

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I am a contractor and have a contract with a placement company. The contract was signed with the understanding that the position would become permanent. Upon beginning work for the company, I find out that it was only intended to be a two-month contract and the recruiting company misrepresented the situation. I have emails that confirm the situation originally outlined as "to permanent".

I now have the potential to work for the company I am contracting at through another firm. This is normally prevented in the contract previously mentioned. However, I am wondering if the contract would hold up, due to the false pretenses surrounding the signing of the contract.
Submitted: 11 months ago.
Category: California Employment Law
Expert:  socrateaser replied 11 months ago.

Hello,

 

Sorry for the delay. Not sure why no one has picked up on your question earlier.

I need to clarify something before I start discussing the substance of your question. The question is posted in the California Employment Law Category -- however, the "State" reference in the question displays, "North Carolina." I assume that one of these references is correct, and the other not.

If your employment is contemplated to be in California, then the noncomplete clause, no matter how phrased, is unenforceable, pursuant to Cal. Bus. & Prof. Code 16600 ("...every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.").

This would effectively answer your question, in that you cannot be restrained from employment via a different organization.

However, if North Carolina is where you are to be employed, then the law is quite different:

  • Covenants not to compete between an employer and employee are "not viewed favorably in modern law." Hartman v. W.H. Odell and Assocs., Inc., 117 N.C.App. 307, 311, 450 S.E.2d 912, 916 (1994), review denied, 339 N.C. 612, 454 S.E.2d 251 (1995). To be enforceable, a covenant must meet five requirements—it must be (1) in writing; (2) made a part of the employment contract; (3) based on valuable consideration; (4) reasonable as to time and territory; and (5) designed to protect a legitimate business interest of the employer. Id. at 311, 450 S.E.2d at 916. The reasonableness of a non-compete agreement is a matter of law for the court to decide. See id.

 

Based upon your stated allegations, if you could show that the employment you accepted was based upon a false representation as to the duration of your employment, then that would violate element #5, because the interest of the employer in your case was apparently to "conflict you out" of the ability to work for any competitors in the region -- and not to employ your services.

 

That would be your argument, and you would have to prove your case. Whether or not the employer's assertion about your permanent employment is sufficient to provide grounds to avoid the noncompete, is not something that I can comment upon with certainty. I can see your argument -- but, I can also see that the employer could argue that no matter what it originally expressed to you, NC is an "at will" employment jurisdiction, and the employer is entitled to terminate employees whenever business requirements change.

 

So, the real question here is whether or not the employer's original contract was made in good faith, or whether it was a ruse to prevent you from working for any competitors.

 

That could be difficult to prove for either of you. Consequently, this case is a "toss up," in my opinion, which carries significant risk for you and the former employer. This could cause the employer to choose to not sue to enforce the covenant. But, if it does, then you would have to defend, and that could be costly.

 

If it were me, I would want my new employer to agree to defend, indemnify and hold me harmless from any liability for the breach, if it is necessary to defend in court.

 

Please let me know if my answer is helpful, or if I can provide further clarification or assistance.

 

And, thanks for using justanswer.com!

socrateaser, Lawyer
Satisfied Customers: 34117
Experience: Retired (mostly)
socrateaser and other California Employment Law Specialists are ready to help you

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