Non-compete
I am a veterinarian who was employed by another veterinarian. I signed a non-compete clause at the beginning of employment...due to a decrease in revenue he let me go. Is the non-compete invalid because he terminated our work relationship?
2 answers | asked Feb 19, 2003 4:05 PM [EST] | applies to New York
Answers (2)
Impact of termination on Non-Compete Agreements
The trend with the most impact on employees is the emerging reluctance of
courts to enforce non-competition agreements in cases in which the employer
terminates the employee. In a small number of jurisdictions, the courts
will find that employee termination voids the contract. In a growing number
of cases, the court will examine whether the termination by the employer was
done in good or bad faith. If done in good faith, the courts will not
consider the termination as a factor weighing against enforcement, but if
done in bad faith, the non-competition agreement will not be enforced.
In New York, there is precedent for the courts to invalidate the non-compete clause of the Agreement. See SIFCO Indus. v. Advanced Plating Techs., 867 F.
Supp. 155 (S.D.N.Y. 1994).
In SIFCO Industries, the court held that the employees'
involuntary termination was dispositive of the issue of enforcement of the
non-competition clause. The court held that, because the former employees
were involuntarily terminated, the court need not examine whether the
agreement was reasonable because it is, as a matter of law, unenforceable.
You should seek legal counsel to review your particular situation and determine your potential liability if you breach the non-compete. Our firm has experience with this type of employment contract review. Please see our website at www.outtengolden.com.
posted by Wayne N. Outten | Feb 25, 2003 3:34 PM [EST]
The trend with the most impact on employees is the emerging reluctance of
courts to enforce non-competition agreements in cases in which the employer
terminates the employee. In a small number of jurisdictions, the courts
will find that employee termination voids the contract. In a growing number
of cases, the court will examine whether the termination by the employer was
done in good or bad faith. If done in good faith, the courts will not
consider the termination as a factor weighing against enforcement, but if
done in bad faith, the non-competition agreement will not be enforced.
In New York, there is precedent for the courts to invalidate the non-compete clause of the Agreement. See SIFCO Indus. v. Advanced Plating Techs., 867 F.
Supp. 155 (S.D.N.Y. 1994).
In SIFCO Industries, the court held that the employees'
involuntary termination was dispositive of the issue of enforcement of the
non-competition clause. The court held that, because the former employees
were involuntarily terminated, the court need not examine whether the
agreement was reasonable because it is, as a matter of law, unenforceable.
You should seek legal counsel to review your particular situation and determine your potential liability if you breach the non-compete. Our firm has experience with this type of employment contract review. Please see our website at www.outtengolden.com.
posted by Wayne N. Outten | Feb 25, 2003 3:34 PM [EST]
Non-Competes in New York
Court in New York State generally do not like non-compete clauses in employment agreements, but there are exceptions to the rule. Whether your situation fits the general rule or an exception depends on the facts specific to your case.
In addition, even if we assume that eventually the non-compete clause in your employment agreement is not enforceable, that does not mean the employer will not sue you on it. That is the big problem with non-competes: even though most non-competes are not enforceable, you may have to spend a lot of money on an attorney to get a court to make that determination for you.
posted by David M. Lira | Feb 19, 2003 5:19 PM [EST]
Court in New York State generally do not like non-compete clauses in employment agreements, but there are exceptions to the rule. Whether your situation fits the general rule or an exception depends on the facts specific to your case.
In addition, even if we assume that eventually the non-compete clause in your employment agreement is not enforceable, that does not mean the employer will not sue you on it. That is the big problem with non-competes: even though most non-competes are not enforceable, you may have to spend a lot of money on an attorney to get a court to make that determination for you.
posted by David M. Lira | Feb 19, 2003 5:19 PM [EST]
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