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Did the employer's termination breach the contract? If the contract was for a set term, that would typically be the case.
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.
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This will turn on the exact language in the agreement.
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.
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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?
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.
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.
How would I find out for sure?
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.
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?
That is a good question.
These agreements will typically define the parties to the contract.
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.
The clause may state successors and assigns...
So if there is not language about successors then there is a good possibility that we are not bound?
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?
Please understand that I can only provide information. As such, I cannot review contracts to provide an opinion. I hope that you understand.
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.
If new employees voluntarily signed new non-competes, those would typically be enforceable unless that employer did something to breach the contract.
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.
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?
It is possible the subsidiary was purchased.
Yes, that is what happened.
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.
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.
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Will do. Thanks for your help.
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