Does my the non-compete agreement that I signed still hold up even if the old company has since dissolved?
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Does my the non-compete agreement that I signed still hold up even if the old company has since dissolved?
I signed a non-compete agreement 2 years ago; it was a 2 year agreement. That company was then sold to another company. I worked for 2 weeks with the new company but never signed another non-compete. I have been gone from that position for a year now and am looking to go back to the same field staffing in the same city. Does my old non-compete agreement still hold up even if the old company does not exist? Does the new company stand a chance to hold me liable for non-compete if they
Asked on August 8, 2017 under Employment Labor Law, Illinois
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
First, forget about being "strong armed" into signing in order to get (or keep) the job--that's why everyone signs these things and it is no legal impediment to their enforceability. Also you received employment for working there, so that is sufficient consideration (or a thing of value) to make the agreement, even if you did not receive other or a separate payment.
IF the corporation continued--i.e. the new owner bought the corporation--the agreement is still enforceable against you, because, the agremeent was (presumably) with the corporation, which still exists (albeit with a different owner). However, if the buyer did not buy the actual corporation (but only bought the assets: e.g. accounts, name, "good will," inventory or equipment, etc.) then the non-compete would only be enforceable against you if it was "assigned" to, or "assumed" by, the new employer--i.e. if they specifically took it over, which is something they may have done (most contracts can be taken over by a different party), but which they would have to prove in court were they to try to enforce it against you.
If they do sue you over the agreement, they could get monetary compensation from you (e.g. the amount of money or pay you make by taking a competing job) and/or get a court order forcing you, on pain of fines or imprisonment for "contempt of court," were you to violate or disregard the order, to stop working at the competing job.
The 2 years takes effect when you leave employment. It is probably longer than court would enforce--they usually enforce only 6 - 12 month agreements--so you would most likely only be barred from competing for a shorter time.
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