Non-compete Clause Valid?

My division is in the procees of being acquired. The new employer required all "transitioning" employees to sign a non-compete clause even though the official transition date is not until April 1, 2005. My "old" company has offered an incentive to their pension plan for employees to remain with them until the transition date. I have been offered another position with a competitor. If I resign on 4/1 am I bound to the terms of the non-compete clause?

2 answers  |  asked Mar 16, 2005 9:21 PM [EST]  |  applies to Pennsylvania

Unlock Non-Compete Agreements: Keys to Escape

Answers (2)

William McLaughlin
Assignment may be an issue

Ms. Ezold's reply is very good. There may also be an
issue of an assignment of the restrictions which a recent
Pennsylvania case addresses.

posted by William McLaughlin  |  Mar 17, 2005 5:14 PM [EST]
Christopher Ezold
You may not be bound by the non-compete agreement.

Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed the relevant documents and facts, and I do not represent you. Therefore, my discussion below is not a legal opinion, but is informational only. Finally, my discussion applies only to issues to which Pennsylvania or Federal law apply, unless otherwise specified.

That being said, you may not be bound by the non-compete agreement. The agreement is an exchange of promises; you promise not to compete with the 'new' employer, and the 'new' employer promises to employ you. If you do not receive the employment, you do not have to keep your promise not to compete.

Your question is complicated, however, by the fact that you accepted the 'new' employer's promise of employment, and are declining to accept that employment. If the courts feel that the promise to employ was consideration enough for your promise not to compete, you may have a difficult time getting out of the agreement.

Without reviewing the agreement itself, I cannot answer your question any further. The secondary issue of your right to the pension incentive also impacts your decision; you do not want to have the incentive withdrawn if you break your promise. Whether this is possible depends on the terms of the incentive, which I have also not reviewed.

In short, there is some risk in backing out of the non-compete agreement, but that risk can likely be managed.

If you would like to discuss this matter further, please feel free to contact me at the below address(es) or number.

/Christopher E. Ezold/
Nancy O'Mara Ezold, P.C.
401 City Line Avenue,
Suite 904
Bala Cynwyd, PA 19004
(610) 660-5585
Cezold@Ezoldlaw.com

posted by Christopher Ezold  |  Mar 17, 2005 08:37 AM [EST]

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