Non-Compete: termination /delayed compensation

A friend of mine signed a contract in November 2002 w/a non-compete clause lasting 3 years. He was recently terminated and secured a similar position with a firm selling the same product. In his prior position he did not receive his first paycheck until February 2003 (3 months from start of employment & contract signature). Until that time he was randomly paid cash $$ out of the employer's pocket (literally). It should have amounted to 45% commission-according to the agreement. It did not. Cash handed over came in at about 25-30% at best - with no receipts at all. Question-
Is the non-compete contract enforceable eventhough he wasn't formally compensated on company books until 3 months later ?? Friend was in desparate straights for a job at the time and currently has no $$ for legal fees.

1 answer  |  asked May 23, 2003 10:42 AM [EST]  |  applies to New York

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Answers (1)

David M. Lira
Income vs. Non-Compete

I doubt that the delay in payment of compensation will have any effect on the enforceability of the non-compete. Whether the non-compete is enforceable will depend on the analysis of the usual issues relating to the nature of the job and the industry. The ultimate question is whether the non-compete was reasonable. Luckily, courts in New York State tend to disfavor non-compete in employment. That is, employers have to prove a lot to prove reasonableness.

If your friend is owed commissions, he may be able to sue for them. That issue, however, technically has nothing to do with the non-compete.

The statement that your friend has no money to pay legal fees points out an inherent problem with non-competes. If you expect to fight a non-compete with the help of an attorney, you will have to come up with money to pay that attorney. In fighting a non-compete your friend cannot expect to collect any damages from his former employer. You are usually defending a lawsuit, and people defending usually don't get damages. Because we operate under what is called the American rule, your friend will be expected to foot the costs of his attorney, and not be able to collect attorneys' fees from his former employer.

posted by David M. Lira  |  May 23, 2003 1:40 PM [EST]

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