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Is an Unsigned Non-Compete Enforceable

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  • 07-01-2010, 02:42 PM
    MattsSwims
    Is an Unsigned Non-Compete Enforceable
    My question involves employment and labor law for the state of: North Carolina.

    I worked for a company for a little over a year ago and was recently let go. I was going back through my paperwork and realized in all the craziness of job start I never signed my non-compete agreement. Can they still hold me to it even if it was never signed?
  • 07-01-2010, 11:14 PM
    Betty3
    Re: Is an Unsigned Non-Compete Enforceable
    Possibly (You did receive a copy of it.). You might take the non-compete to an employment or contract attorney in your area for review. There may be something in the non-compete that would make it unenforceable even if it would have been signed.
  • 07-02-2010, 08:52 AM
    Mr. Knowitall
    Re: Is an Unsigned Non-Compete Enforceable
    I expect that the following statute would provide you with a strong defense against an unsigned noncompete agreement or clause:
    Quote:

    Quoting NCGS § 75‑4. Contracts to be in writing.
    No contract or agreement hereafter made, limiting the rights of any person to do business anywhere in the State of North Carolina shall be enforceable unless such agreement is in writing duly signed by the party who agrees not to enter into any such business within such territory: Provided, nothing herein shall be construed to legalize any contract or agreement not to enter into business in the State of North Carolina, or at any point in the State of North Carolina, which contract is now illegal, or which contract is made illegal by any other section of this Chapter.

    There may be some circumstances under which a noncompete clause is enforceable even though it's not signed, such as when it is entered at the time of the original contract of employment or where it is supported by substantial consideration:
    Quote:

    Quoting Forrest Paschal Machinery Co. v. Milholen, 27 N.C. App. 678, 220 SE 2d 190, 195 (1975)
    By G.S. 75-1, contracts in restraint of trade are made illegal in North Carolina. See also G.S. 75-2 and G.S. 75-4. This State, however, has long recognized the rule that a covenant not to compete is enforceable in equity if it is "(1) in writing, (2) entered into at the time and as a part of the contract of employment, (3) based on valuable considerations, (4) reasonable both as to time and territory embraced in the restrictions, (5) fair to the parties, and (6) not against public policy." Exterminating Co. v. Griffin and Exterminating Co. v. Jones, supra, 258 N.C. at 181, 128 S.E.2d at 141, and cases there cited.
    The court found as facts that William was first employed by plaintiff on a permanent basis on 1 February 1966 and that the contract containing the covenant not to compete was executed on or about 23 July 1966. The court further found that he did not receive any promotion or increase in salary at the time of the execution of the covenant not to compete and that thereafter he remained in plaintiff's employ for some 8½ years, received numerous increases in salary and was promoted to the positions of director of engineering, director of sales, and vice-president. There was ample evidence before the court to support these findings. It is clear that, based upon the findings of fact, the covenant not to compete executed by William on 23 July 1966 was not ancillary to a contract of employment nor was it supported by substantial consideration. The court correctly concluded that the covenant not to compete executed by William and plaintiff is not enforceable.

    That's an older case, and although I don't see anything that affects its outcome I don't have a full set of North Carolina research tools available and thus would encourage you to verify the current state of the law with a North Carolina attorney.

    Note that even without a non-compete agreement, former employees are not permitted to share the confidential information or trade secrets of a former employer.
  • 07-02-2010, 04:05 PM
    Betty3
    Re: Is an Unsigned Non-Compete Enforceable
    Thanks for the add'l. info, Mr. K.
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