My employer changed my benefits after I signed a noncompete? Is this legal?


My employment contract states that my employer will fund a HealthSavings Account, which is tied to the company's health benefit plan. The contract has a non-compete clause which kicks in after one year (I've been with the company for 18 months). Today I learned that the company will no longer fund the HSA account. The amount that the company puts into the HSA account is significant (~6.5% of my salary), so this could potentially be a very big financial setback for me -- it's practically like having no health insurance. If I protest too loudly, I am afraid that my company will try to fire me. What can I do? And am I stll bound to the non-compete clause in my contract if the employer stops funding the health savings account as described in the contract? Can I keep working with the company, and leave as soon as I find a new job? (I'd prefer to avoid unemploment at all costs.) Thank you.

2 answers  |  asked Jan 26, 2011 2:59 PM [EST]  |  applies to Ohio

Answers (2)

Neil Klingshirn
In Ohio, if one party to a contract commits a material breach of the contract, the other party can elect to remedy the breach by rescinding the contract. From a legal perspective, rescinding a contract is the same as if the contract never existed in the first place. Courts have applied this rule to non-compete agreements to allow employees to rescind them if the employer breaches a material term.

A material term is one that goes to the essence of the contract; the reason for entering into it in the first place. If you would not have entered into the employment agreement with the non-compete but for the promise of a fully funded HSA, then the failure to fund the HSA may be a material breach.

I cannot tell from your post whether the HSA was a material term, or whether the employer's breach will allow you to rescind it. I suggest that, once you find an opportunity with a new employer, you consult with an experienced employment attorney to evaluate whether you can challenge the non-compete based on this breach, or on any other possible grounds.

posted by Neil Klingshirn  |  Jan 27, 2011 07:42 AM [EST]  [ Best Answer - selected by asker ]
Neil Rubin
This message is not meant to: 1) contain my signature; 2) contain legal advice; 3) create an attorney/client relationship; or 4) guarantee confidentiality.

If you read the posts in the archive section about non-competes you will see that I feel they fuel an employee disaster waiting to happen.

The only way to assess your risk in breaking the contract would be to have an experienced employment lawyer read the contract and determine from its language and the specific facts what an outcome MIGHT be if you should get a new job with a purported competitor.

posted by Neil Rubin  |  Jan 26, 2011 3:07 PM [EST]

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