Is a non-compete valid if the employer breaches the agreement?

As part of a hi-tech development deal, XYC (of which I own 30%) hires me as CTO (administer and develop) at a salary that increases with CPI. As part of emloyment contract, I agree to assign all inventions to XYZ.

In a later year, I realized that my salary has not been adjusted in 3 years. Co. accountant concurs: I'm owed $30K (base salary ~100k).

At the same time, 'angel' investor sees Co needs more $ to continue. Offers to put $ in if I reduce my ownership. I ask, 'where's my $30K?' "You'll not get $30K unless you agree to contribute stock." $30K has not been paid, despite 90 days, written notice, etc.

Question: if I terminate my employmeny because of this breach, is the entire employment agreement (assignment, 2 year non-compete) cancelled? Can they remedy after I terminate my employment?

Any suggestions?
Andrew

1 answer  |  asked Mar 15, 2001 8:29 PM [EST]  |  applies to New York

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Answers (1)

David M. Lira
Expect a lawsuit if you breach your non-compete.

A major mistake for an attorney to make is to interprete a contract without seeing the contract. However, with that caveat, it would seem that you at least have a good argument for voiding the contract based on the employer's breach.

New York State courts are generally hostile to non-compete clauses, but your type of position is the very type of position that would cause a court to enforce the non-compete clause. So, you should be very careful about bolting without knowing exactly what you are getting into. As I have told many client, when you sign a contract with a non-compete clause, you are essentially buying a lawsuit. Your type of technical expertise would seem to be the type of thing that would almost guarantee a lawsuit if you suddenly left and joined a competitor.

I hope this helps.

Sincerely,

David M. Lira

posted by David M. Lira  |  Feb 21, 2001 12:48 PM [EST]

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