Cancelled contract: non-compete affecting many.

I work for a company (ABC) that provides outsourced I.T. services for a client (XYZ) and working within XYZ's premises. My employer, ABC, has announced that they have placed a 90 day notice to terminate the contract with XYZ. At the end of the 90 days I, as well as another 20+ employees, are out of work. We all have non-compete / non-solicit agreements. The company refuses to release anyone from it, thus forcing us all out of work. We want to work directly for XYZ, who will be hiring directly with no intentions of ever using contractors or outsourcing I.T. positions as they did with ABC. Does'nt this qualify as having "No legitimate interest" since ABC is terminating the contract with XYZ? We all have non-solicit / non-compete agreements prohibiting us from working with XYZ. These agreeements were extremely broad... less than a page in length... with extremely generic details, from what I recall. There was no compensation for these agreements either, and no one was ever given a copy of it and the company refuses to provide us with a copy to review. Is this legal? Can they grid-lock everyone this way? Please advise.

2 answers  |  asked Jul 15, 2006 12:56 PM [EST]  |  applies to Florida

Answers (2)

Donna Ballman
Non-compete - no legitimate interest

I had a very similar case where an employer had lost its contract and tried to enforce the non-compete. We successfully convinced the former employer that they had no real chance of enforcing the restriction where they could not find alternate employment for the employees. Because they were thrown out of work through no fault of their own, there was simply no legitimate interest to protect. Many employers are willing to either negotiate away or negotiate limitations on non-compete agreements.

Of course, you still can't use confidential trade secret information belonging to ABC.

If they really want to enforce the restriction, they ought to offer you a severance package to give you an incentive not to jump to XYZ. It certainly gives you some leverage to negotiate.

Donna Ballman

posted by Donna Ballman  |  Jul 17, 2006 2:27 PM [EST]
Scott Behren

I would have to see the terms of the non-compete and talk with you further about it. Does not sound like they should have a basis to enforce the non-compete. Feel free to call me if you have furhter questions.

Scott M. Behren
(954) 385-5433

posted by Scott Behren  |  Jul 17, 2006 07:22 AM [EST]

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