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JBaxLaw
JBaxLaw, Employment Lawyer
Category: Employment Law
Satisfied Customers: 11319
Experience:  Government and private sector employment law experience
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I live in Iowa and had an employment contract which was to

Resolved Question:

I live in Iowa and had an employment contract which was to last for 6 months. At the end of the third month my employment was terminated with no reason given. They did not fight me on unemployment so there was obviously no conduct breach of any kind. My question is, is my non-compete agreement that I signed still in effect?
Also, to add more to it, the company as since sold out. The new company retained the name but immediately fired all of the existing employees and required them to sign a NEW non compete agreement as a condition of rehire.
Any advice would be helpful.
Submitted: 1 year ago.
Category: Employment Law
Expert:  JBaxLaw replied 1 year ago.

AttorneyJohnJ :

Hello, I am a professional here to assist you. I appreciate your use of this service.

AttorneyJohnJ :

Did the employer's termination breach the contract? If the contract was for a set term, that would typically be the case.

AttorneyJohnJ :

If the contract was breached, the employer is unable to enforce the agreement. That would include a non-compete based on a commitment of employment for a term.

AttorneyJohnJ :

hello

AttorneyJohnJ :

I see that you have joined me.

AttorneyJohnJ :

This will turn on the exact language in the agreement.

AttorneyJohnJ :

The key is to determine if the termination was a breach of the non-compete. In essence, if an employer fails to keep their end of a contract the other party is also relieved of fulfilling their obligations.

AttorneyJohnJ :

Are you with me? Please be sure to press the reply button to post the information you are typing

Customer:

Excellent. Just additional information. I originally signed the non-compete when I was hired 9 years ago. In January 2012 I signed the six month contract and was let go in April 2012...3 months short of completing that contract. Does what you said above still apply?

AttorneyJohnJ :

hello?

AttorneyJohnJ :

What I said would still apply, but these contracts may vary. The non-compete could remain binding depending on the wording. You need to read the agreement as to the non-compete and enforceability in the event you are terminated.

AttorneyJohnJ :

The general rule is that a breached contract is unenforceable, but you need to read carefully to ensure that the employer cannot still enforce the non-compete. For example, if you were employed for nine years the employer may have met the necessary obligation to enforce the agreement.

Customer:

How would I find out for sure?

AttorneyJohnJ :

The only way to find out for sure would be to have an attorney examine the document. Often these matters are about weighing risk. Parties may disagree over whether a contract was breached and whether a non-compete is enforceable. The key is that you obtain all the information possible to weigh and support your decision.

Customer:

Also my business partner worked for the same company and signed a non compete 15 years ago along with his employment contract. The company was recently bought out and they fired all the employees. The rehired them with NEW employment contracts and NEW non competes. He signed the new employement contract but DID NOT sign the new non compete. Is he still bound?

AttorneyJohnJ :

That is a good question.

AttorneyJohnJ :

These agreements will typically define the parties to the contract.

AttorneyJohnJ :

As to employer, the definition will likely include successor companies. But, this too turns on the exact language. You would need to look at the contract he did sign and see if such language was missing. Absent such language, he would only be bound to the terms as to the original party to the contract.

AttorneyJohnJ :

The clause may state successors and assigns...

Customer:

So if there is not language about successors then there is a good possibility that we are not bound?

AttorneyJohnJ :

If there is a new party, new contract and no non-compete with the new company and no successor language in a contract then typically there would not be a binding non-compete as the obligation was to the former party. As in all of these situations, there are variable depending on the old contract and what occurred to the old entity. For example, does it remain in existence. Did it breach the first contract?

Customer:

Attachment: 2013-06-13_155220_non_compete.pdf

Full Size Image
Here is the doc. See if it comes through

AttorneyJohnJ :

Please understand that I can only provide information. As such, I cannot review contracts to provide an opinion. I hope that you understand.

Customer:

ok

AttorneyJohnJ :

My role is to provide you information useful to you which you may apply to your own situation and draw your own conclusions. Local attorneys would charge at an hourly rate of $200-$300 per hour for reviewing such a contract and to provide you guidance on the risks of the non-compete.

AttorneyJohnJ :

If new employees voluntarily signed new non-competes, those would typically be enforceable unless that employer did something to breach the contract.

Customer:

The original company that was in existence was Sorensen's computer Connection Inc. D/B/A Heartland Technology Solutions. SCCI sold HTS to another company. They retained the name HTS but the parent company (SCCI) did not go with the sale. The new HTS is the company that is claiming the non competes are in effect.

Customer:

I understand you can review the doc but if there is no language as to a successor your opinion (and I realize i can't hold you to it) is that it is not enforceable with the new company?

AttorneyJohnJ :

It is possible the subsidiary was purchased.

Customer:

Yes, that is what happened.

AttorneyJohnJ :

If the subsidiary corporation was purchased, that entity could still enforce such a non-compete. Think of the subsidiary as a separate entity from the parent company. So long as the agreement was with the subsidiary typically enforcement would not be a problem for that company. The parties to the contract, subsidiary employer and employee, would remain the same.

Customer:

Ok, so it all comes down to whether or not they breached my employment contract. I'll see if I can find an attorney to look it over.

Customer:

thanks!

AttorneyJohnJ :

Will you be so kind as to leave a positive service rating?

I would greatly appreciate it. I rely on excellent ratings and optional bonuses to provide this service.

Thank you and please have a great day. You will see an option to leave the rating on your screen.

Customer:

Will do. Thanks for your help.

JBaxLaw, Employment Lawyer
Category: Employment Law
Satisfied Customers: 11319
Experience: Government and private sector employment law experience
JBaxLaw and 3 other Employment Law Specialists are ready to help you

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