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Patrick, Esq.
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I was fired without cause by my Utah employer. Now a competitor

Customer Question

I was fired without cause by my Utah employer. Now a competitor has offered me a position as an accountant. is my NDA and non-compete still enforce, even though I was fired?
Submitted: 2 years ago.
Category: Employment Law
Expert:  Patrick, Esq. replied 2 years ago.
Hello and thank you for entrusting me to assist you. My name is ***** ***** I will do everything I can to answer your question.
Utah courts enforce non-compete clauses that satisfy the following requirements: (1) the clause is supported by consideration; (2) no bad faith is shown in the negotiation of the contract; (3) the clause is necessary to protect the goodwill of the business; and (4) the clause is reasonable. (See System Concepts, Inc. v. Dixon, 669 P.2d 421, 425-26 (Utah 1983). NDAs are enforceable, as well.
When an employee is terminated a non-compete does not automatically become void. (See Allen v. Rose Park Pharmacy, 237 P.2d 823 (Utah 1951)) The same holds true for NDAs. However, termination without cause will allow the employee to argue that the non-compete is "unreasonable" because it will result in extreme hardship due to no longer being employed and being unable to engage in similar work elsewhere. When an employee is fired without good cause, that also suggests that the non-compete was entered into in bad faith.
The bad news is that these arguments do not prevent you from being sued, they just provide defenses to a lawsuit should one be filed against you. Lawsuits can be costly and time consuming to defend, and nobody has a right to be exempt from lawsuits. So, by taking a job with a competitor, you will be taking some risk that you will be sued and also some risk that you will lose the lawsuit. Of course, your employer may not ever find out you've gone to a competitor. They may also decide not to sue you because they don't think it would be worth the time and moneyon their end and/or they don't think you'd be able to pay a judgment.
Ultimately, you need to weigh these risks and decide what is in your best interest. There is no ideal solution here and no way to protect yourself 100%. How to proceed is a judgment call that only you can make.
I hope that you find this information helpful. Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.
If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes moving forward.