DEAR CARRIE: When I started working for a company in 2011 I signed a noncompetition agreement that my employer still has. I left at the end of 2013 for another position and returned to work part time in the spring of 2014. I stayed until I was recently let go. I have not signed a new noncompete agreement, so I wanted to know if my old noncompete would still be valid. I may have read in a previous column of yours that noncompete agreements end when your employment is terminated. — Noncompete Kaput?
DEAR NONCOMPETE: For help with your question, I turned to an employment attorney who has long represented employees on this issue: Alan L. Sklover of Sklover & Co. in Manhattan.
What the agreement addresses and its exact language are key in determining its current reach. What promises does it make, and what exactly does it spell out?
“So, for example, if your noncompete said, ‘This applies only if you resign,’ and you were laid off, then on that point alone, your noncompete would likely not be enforced,” Sklover said.
In addition, because you were laid off, and not fired for misconduct, “these facts and circumstances are very helpful to you,” he said.
He estimates that half of judges in the nation would not enforce a noncompete agreement if the employee was laid off. Judges are more willing to enforce the agreements when employees quit to work for a competitor or when they are terminated for misconduct, he said.
Regarding promises made to you, if the company offered you a signing bonus but reneged on it, that would bode well for you.
“If, for example, you were promised $5,000 to sign your agreement, and you were never paid that $5,000, that would likely void the noncompete,” he said. “Here, too, the facts, events and circumstances can make or break the validity of a non-competition agreement — or any contract.”
As for the constraints that a noncompete might place on your future employment, Sklover says that such agreements are different from other contracts because their enforceability also depends on whether a judge views their enforcement as “the fairer thing to do.”
“So if you have four children; this was the only field of work you knew, and your family might have to become homeless if you can’t work, those circumstances would likely make a judge refuse to hold it enforceable,” he said. “What is the ‘fairer thing’ to do makes noncompetes unique among contracts in how they are handled under the law.”
By contrast, “If you stole client information and were going to work for a direct competitor, it is more likely the scales of justice would tip the other way.”
Based on his experience, Sklover believes it is likely that your noncompete agreement is unclear on whether it “repeats itself” by extending to your second stint at the company. That would be a plus for you.
“The law is wise, and says if a document is unclear on a point, then the law will decide the issue against the interests of the party who drafted it, as sort of a punishment for sloppiness,” he said.
Sklover emphasized that he can’t give you a more definitive answer without seeing your contract but believes “you have a strong argument.”
He said you need to determine exactly what your noncompete agreement says, and that may involve seeking the services of an attorney.
“There is no substitute for a very careful reading of the noncompete, just like it is for any contract,” Sklover said.
To head off a dispute, bad feelings or litigation with your former employer, he suggests you send a “respectful” letter, including perhaps this column, to thank the company for “past courtesies” and to confirm that it won’t prevent you from working for a competitor.
“It just might work,” he said.
FOR MORE INFORMATION
Go to bit.ly/LInoncompete for more on noncompete agreements.