Is my non-compete still enforceable if my company was bought out and I was laid off?
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Is my non-compete still enforceable if my company was bought out and I was laid off?
I was asked to come back to my company and I started 6 months ago. On the first day we were bought out by another company and the transaction finally took place last week. I was laid off today and will receive a small severance package. I originally signed a non compete with my original company and have not signed one for the new company. I have not completed training yet and my questions are. Does the non-compete hold up because I was laid off and if my severance is a lot less than the year I would need to be off for the non compete is that justifiable?
Asked on August 17, 2015 under Employment Labor Law, New York
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 9 years ago | Contributor
1 If you signed the non-compete before being laid off, and then did not sign a new one after being re-hired, the old one should no longer be binding on you because of the loss of employment. If the employer wanted to re-establish the non-compete, they should have had you sign a new one.
2 If you signed a non-compete when you returned, and the company you signed it with was not an LLC or corporation but was a sole proprietorship, then the agreement was with the former sole proprietor, not the new company, and so is not in enforceable by the new company.
3 If you signed a non-complete when you returned and you signed the agreement with an LLC or corporation, but the LLC or corporation was not purchansed--the buyer only purchased the assets, not the business structure--then the ageement is with the old LLC or corporation, not the new company, and the new company may not enforce it.
Only if you signed the agreement when you returned with an LLC or corporation and the LLC or corporation itself was purchased, can the buyer enforce the agreement against you.
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