Validity when there are multiple non-competes

We recently hired someone who's former employer is threatening to sue him and us for violation of his non-compete. He was hired out of college by a large national firm in their scientific division where he signed his initial non-compete. He then moved to their Engineering division. His last move within this national company was with their finance division which had a different name and was a subsidiary of the parent company and a sister company of the one where he signed his original non-compete. When he gave his 2 week notice to his boss he asked him to sign a new non-compete which said he could not do finance staffing. Our question is this, does the fact that they had him sign the new non-compete invalidate his original non-compete since that was at a seperate yet affiliated company.

1 answer  |  asked Mar 17, 2009 10:04 AM [EST]  |  applies to Ohio

Answers (1)

Neil Klingshirn
A court will try to read the non-competes together.

A court goes through a two step analysis with non-competes. First, it identifies the parties' agreement. Second, it decides whether the agreed upon restrictions are too limiting and, if so, redraws the restrictions.

When parties to a contract enter into several agreements regarding the same subject, a court will decide whether the most recent agreement extinguished the prior agreements. Often contracts have a "supersedes" clause that extinguishes the old agreement.

If the parties did not express an intent to extinguish or amend the earlier agreement, the court will try to read them together, if possible. If they are in direct conflict, however, the court will have to decide which agreement to enforce. Generally, the court will enforce the more specific and/or more recent of the agreements.

Once it figures out the contours of the parties' bargain, the court will then go to the second step of analyzing whether the restrictions of either are too severe. In your case, a court could conclude that the parties did not extinguish the first non-compete, but decline to enforce it anyway because it no longer protects any legitimate interest of the prior employer.

To give you a more certain answer, I would have to see all of the agreements.

Neil Klingshirn.

posted by Neil Klingshirn  |  Mar 17, 2009 10:51 AM [EST]

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