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Non-Compete of Terminated Employee - Enforceable or Not

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  • 10-25-2011, 04:25 PM
    land_shark3
    Non-Compete of Terminated Employee - Enforceable or Not
    My question involves labor and employment law for the state of: North Carolina

    Employee signs a two year non-complete clause upon being hired as a veterinarian. Geographic territory is referenced as appendix but not included in original contract. After four years of employment, employee is terminated without warning; official reason provided on application for unemployment compensation was that employee for poor performance and did not fulfill duties.

    Is the employee bound by the noncompete since the employee was terminated?
  • 10-25-2011, 04:54 PM
    ESteele
    Re: Non-Compete of Terminated Employee - Enforceable or Not
    As a general matter, courts look at non-compete agreements with disfavor. If a non-compete includes an excessive period of time and/or geographic scope, a court will likely strike down the agreement. You will need to consult directly with experienced counsel in NC to determine whether this particular agreement will pass muster in light of the relevant state law precedents.

    With respect to your sudden, unexplained termination, normally an involuntary discharge in and of itself will not nullify a sufficiently narrow non-compete clause. Again, you will need to consult with local counsel to ascertain whether your termination will affect the enforceability of the agreement.
  • 10-25-2011, 11:00 PM
    Betty3
    Re: Non-Compete of Terminated Employee - Enforceable or Not
    Quoting Hejl v. Hood, Hargett & Associates, Inc., 674 SE 2d 425 (N.C. App. 2009)
    --------------------------------------------------------------------------------

    Our Courts have held that a covenant not to compete is valid if the covenant 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, 258 N.C. 179, 181, 128 S.E.2d 139, 140-41 (1962) (quoting Asheville Associates v. Miller and Asheville Associates v. Berman, 255 N.C. 400, 402, 121 S.E.2d 593, 594. (1961)). "Where the covenant is entered into in connection with an employee's being hired for a job, it is generally held that `mutual promises of employer and employee furnish valuable considerations each to the other for the contract.'" Reynolds & Reynolds Co. v. Tart, 955 F.Supp. 547, 553 (W.D.N.C.1997) (quoting Greene Co. v. Kelley, 261 N.C. 166, 168, 134 S.E.2d 166, 167 (1964)). However, when the restrictive covenant is entered into after an already existing employment relationship, the covenant must be supported by "new consideration." Greene Co., 261 N.C. at 168, 134 S.E.2d at 167 (emphasis added) (citing Kadis v. Britt, 224 N.C. 154, 29 S.E.2d 543 (1944)).

    You do need to take your agreement to an employment or contract attorney in your area for review & advice. They are more or less looked at on a case by case basis.
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