Is Non-compete Agreement enforceable if the employer has no more business with the client

I was laid off from the current employer (Say, X) because they don't have any clients and its hard to keep all the consultants.

I signed a non-compete agreement with X when I joined them 2 years ago. It says that I can't work with the client, that I had been working with during 12 months before termination, for 12 months after termination. I worked with a client (Say, Y) during the past 12 months.

Now, X has no business with Y (In fact, X is out of preferred vendors list of Y because of high billing rates). Another company (Say Z) is trying to place me with Y. X doesn't want to release me from non-compete because they think their business is impacted.

On top of it, X has released another former employee from this non-compete agreement, who was laid off a month before me. This is totally discrimination.

Can I go to court against X?

1 answer  |  asked Dec 5, 2001 7:11 PM [EST]  |  applies to Ohio

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Answers (1)

Neil Klingshirn
You can file suit for a ruling that old employer has no business interest .


Ohio courts generally enforce non-competes only to the extent the employer who wants to enforce it can show that enforcement is necessary to protect a legitimate business interest. In your case, the business interest that the employer would claim to protect is a customer who has chosen not to do business with your old employer. Therefore, your old employer will have difficulty arguing that it still has a business interest to protect.

As for waiving the non-compete for another employee but not for you, it is discrimination, but probably not unlawful discrimination. That is, unless you can prove that the employer is refusing to waive your non-compete because of your race, age, gender, national origin or other unlawful reason, it is allowed to discriminate.

Importantly, you may still be able to use the fact of the waiver for the other employee as proof that the employer has no business interest to protect in your case. That is, if it had such an interest, it would not have waived the non-compete for the other employee.

Finally, as for whether you can sue the old employer, Ohio law allows you to file a "declaratory judgment" action. This suit will ask a court to "declare" whether the non-compete is enforceable. Again, your best argument that it is not is that the employer no longer has a business interest to protect.

I suggest that you hire an Ohio attorney near you to write a letter to your old employer explaining all of this. Your employer should be willing to negotiate a release of your agreement. If you would like any further help, please call.



posted by Neil Klingshirn  |  Dec 6, 2001 1:17 PM [EST]

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