Can a Non-compete agreement be upheld if my company isn't competing in the industry segment?

I was hired by a start up company 6 months ago to develop a segment of their business that they did not have presence in the industry, an industry that I have years experience. They recently let me go, because they can no longer afford to support the business segment, and have decided not to compete in this space at this time. They have offered a severance package providing that I sign a non-compete that restricts me from working in the industry for 6 months. They claimed that this is the same agreement I signed when I started, but I'm confident that I didn't. If I did sign this agreement, can they restrict me from working in a segment of the industry that they are not currently working in but may in the future?

1 answer  |  asked Apr 29, 2015 05:57 AM [EST]  |  applies to Illinois

Answers (1)

Anthony Cameron
You don't state how closely the general mission of the company and the prohibited conduct are aligned. Of course, there are a whole different buffet of issues if you did sign a non-compete with your employment agreement. That agreement would have to analyzed as being contemporaneous with your employment and cannot be addressed here. Assuming, you signed no initial non-compete, we must first remember that an exit or severance agreement is governed by completely different doctrine than at employment intake. Since the employer is under no obligation to offer severance, any money it does offer does constitute adequate consideration for the bargain, whatever that bargain is. Theoretically, they could pay you not to eat pasta or not to ride a bicycle for the number of mos. It really doesn't matter that they are not asserting a protectible interest (like it would in an employment agreement.) The agreement on severance would be whatever the two parties would agree to. The analysis you are attempting to apply only fits in a preemployment non compete. At this stage, you are bargaining for content. Of one thing I am sure: No court is going to allow to sign an agreement, take the money and then argue you are not bound by a completely voluntarily entered into bi-lateral severance agreeement. Perhaps you have read something about non-competes online and whatever you have read makes no distinction between entering and exit agreements. If you take their money, be prepared to bound by the language of the NCA/Severance agreement.

Anthony Cameron
Quincy, IL

posted by Anthony Cameron  |  Apr 29, 2015 09:58 AM [EST]

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