Parent corporation non compete agreement

I am currently working in a drafting position for a company which is owned by a large parent corporation. I have been there for less than a year and have not had any client contact. I signed a non compete agreement upon my hiring. The agreement is for a term of 2 years and includes any of the parent corporations 38 worldwide companies, which are all in the same industry (and encompass every aspect of that industry). The position I have been offered is in a small company that does not compete with the company I currently work for, however the parent corporation does own a company that does similar services. The new employer does not recall competing with any of the parent corporations divisions. Am I still in breach of contract? Is the non compete too broad to be enforceable? Any input would be greatly appreciated.

1 answer  |  asked Sep 11, 2007 2:54 PM [EST]  |  applies to Pennsylvania

Answers (1)

Christopher Ezold
You should be able to compete with your employer's parent company/divisions.

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 should be able to compete with your employer's parent company and its other divisions. This is because, to be enforceable, your employer must have a legitimate business reason for preventing competition. First issue is that the parent company, and its divisions, are not your employer. The second issue is that you have no involvement with the business of the parent company and its divisions, and therefore, there could be no legitimate business reason to prevent competition (mere competition itself is NOT a legitimate business reason).

Therefore, the agreement is likely to be unenforceable against you in your new employment. However, I must stress again that I don't know all the facts in your situation, nor have I read the documents. You should have them reviewed by an attorney.

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.
One Belmont Avenue,
Suite 501
Bala Cynwyd, PA 19004
(610) 660-5585
Cezold@Ezoldlaw.com

posted by Christopher Ezold  |  Sep 11, 2007 3:15 PM [EST]

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