Employer changes terms non-compete contract. Still Enforcable?

I am currently in my first year at a large financial services firm in Phoenix. My firm has decided to change its training and compensation program mid-stream, which has eliminated the possibility of a bonus for any current trainees, which I was told would be available at the end of year one. I have built my business towards reaching these bonus levels and I can't continue in year two with out this compensation.The entire pay structure within the firm is changing and word has it that all brokers are going to need to sign a new pay agreement, also. Is my non-compete agreement still in force if they change the "rules of the game" on me and basically force me out of business? I hear the phrase that Arizona is a "Right to Work State." How does that come into play here?

1 answer  |  asked Feb 20, 2002 4:08 PM [EST]  |  applies to Arizona

Answers (1)

Francis Fanning
Right to Work

To answer your last question first, Arizona is indeed a "right to work" state. This has nothing to do with your questions. A right to work state is a state that has a law prohibiting an employer and a union from entering into an agreement requiring union membership as a condition of employment (what is sometimes referred to as a closed shop agreement).
Your questions involve the interpretation of your bonus agreement and your non-compete agreement. Without seeing the agreement, I cannot give you any competent advice on the issues you have raised.
In general, an employer is required to pay the wages agreed upon when they are earned. Bonuses are included in the definition of wages. But without seeing the bonus plan, I cannot tell whether you would be able to argue that the bonus has been earned.
Non-compete agreements are not favored in the law but will be enforced if they are necessary and if reasonably limited in time and geographic scope. If the consideration (thing of value) given to you when you signed the non-compete agreement was the bonus plan, you may be able to argue that the unilateral change by your employer caused a failure of consideration. You may also have other arguments to make to keep the agreement from being enforceable. I suggest you consult with an attorney who deals with these issues. It is well worth the cost of the consultation.

posted by Francis Fanning  |  Feb 26, 2002 1:20 PM [EST]

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