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Albert Marmero
Albert Marmero,
Category: Employment Law
Satisfied Customers: 197
Experience:  Partner at Long, Marmero, & Associates, LLP
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Please find my question below. I have joined IT consulting

Customer Question

Hi,
Please find my question below. I have joined IT consulting firm in 2007 and since then I am with them working as consultant. During my tenure there were several mergers and lastly it was acquisition.
I joined company A and there was non compete in 2007 and then it was merged to company B in 2012 and there was non compete agreement signed. It was then acquired by company C in 2015 where I didn't sign any non compete but in merger document it says that company C is successor of company B and taking care of its all obligations.
Now, I joined this client in 2015 and after working them for over two years they offered me full time my H1 is transferred and now my employer is saying that is non compete and non solicit violation and they can send me a notice and penalize to pay big amount. I served them over 10 years all together still they treat me like this but I see a possibility to settle outside getting into legal by paying around 10-12k dollar is it worth doing it ? I can negotiate but I know the owner and new mgmt is stubborn and can ask upto 15k. Kindly advise.
Submitted: 4 months ago.
Category: Employment Law
Customer: replied 4 months ago.
Also, this is employer to vendor and client model and my vendor has. I objection in myself joining client but employer is saying they will send me a notice but I have a chance to settle this outside and should pay them $10-15k.
Expert:  Albert Marmero replied 4 months ago.

I need to know a bit more in order to better answer your question. Specifically, when Company C acquired Company B, did Company C simply buy all of Company B's assets leaving Company B as non-existent (Asset Sale). Or did Company C buy the stock of Company B, with Company B remaining in existence, but with different board members and officers (Stock Sale). I ask, because if it was an Asset Sale, the non-compete agreement may not be transferrable to Company C. If it was a Stock Sale, then the non-compete is transferrable and still valid.

This leads to my next question. What state are you located in? This is important because the states are split on how to treat non-compete agreements after an Asset Sale. In fact, eleven (11) states specifically state that non-competes are non-transferrable after an asset sale unless the employee consents.

This link will take you to an article which has a list explaining how each state treats assignability of non-competes. https://casetext.com/posts/are-employee-noncompetes-assignable-a-state-by-state-review

So if this was a Stock Sale then you will likely need to abide by the Non-Compete and you may need to consider the settlement payment. If it was an Asset Sale, the Non-Compete is only valid if this was in a state which permits assignment of Non-Competes.

I hope this is helpful. Please provide a rating so I receive credit for promptly responding to you. After rating, feel free to ask follow-up[ questions. Thanks!

Customer: replied 4 months ago.
Thank you very much for prompt reply! I will look into this detail and get back to you. There was no stock for previous company and it was under financial stress they filed chapter 11 earlier and I lost my $1500.00 in it. All of this companies are located in NJ state where I reside.
Customer: replied 4 months ago.
Also, the previous company doesn't exist anymore since they were under financial stress.
Expert:  Albert Marmero replied 4 months ago.

That could be a problem. New Jersey is one of the few states where non-competes such as this are assignable without the employee's consent. So if the non-compete was properly assigned to the successor company. then you will need to settle this issue.

Please provide a rating.

Customer: replied 4 months ago.
Hey Albert you are absolutely right! I would give you excellent rating where should I put that ?