The Sig Forum is a wealth of information so here is the info I seek.I just retired and might look for a side gig.At this point it isnt an issue and not worth getting legal advice and will take anything posted here as just a conversation but the question has come up.
I worked for an ESOP and signed a Non Compete when I hired in.About 5 years in the Company consolidated a couple divisions and was renamed.Same company so Non Compete still in force.
Here is what I was curious about.The ESOP was closed to facilitate a sale of the business to a holding company and then the holding company split the business back to the core divisions and sold the division I worked for back to the majority shareholder of the former company.The name was changed and I continued my employment but never signed any new paperwork.Is the original Non Compete still active.
I'm alright it's the rest of the world that's all screwed up!
It’s hard to know for sure but it’s very possible. Contract rights are much like assets so it’s very possible they changed hands as the business did. The document you signed probably had language in it to the effect that it would “benefit the parties successors and assigns” to facilitate that. As with most things legal the answer is in the details.
Give a copy to any prospective employer and let them decide if it’s an issue.
Posts: 1013 | Location: Tampa | Registered: July 27, 2010
As you say, this is conversation, not legal advice. It will primarily depend on three things. First two are the actual language of the non compete and your state's law. Without knowing those, not nearly enough info to address your question. Third is the way the various corporate transactions were structured. Name changes, shareholder changes, even different companies might not matter if, for example, assets rights etc were transferred to the successor entity as part of the transaction. Just because the original company you contracted with no longer exists does not necessarily mean your contractual obligations are extinguished. If you really need advice you can rely on you should consult a local attorney.
Posts: 582 | Location: S Fla / Western NC High Country | Registered: May 03, 2015
The answer will be in the details. It will depend on how the non-compete was written, and how the company was sold and bought. For discussion purposes, it is entirely possible for contract obligations to survive ownership changes and change of business structures. In fact, this is typical, as one of the things being purchased for value in an acquisition are existing contracts with employees, vendors, and customers. You will need to look at the contract language concerning "assignment" and "successors in interest" and have a detailed understanding of how the merger/acquisition was carried out to really make an assessment.
You should also consider if you were ever laid off from one entity and then rehired by another. Look for an actual break in employment. This may have some influence on the outcome.
Additionally, you may be able to find holes in the non-compete itself, as some states make it harder than others to enforce those kinds of contracts.
Posts: 13066 | Location: Orange County, California | Registered: May 19, 2002
I think what most are saying here, we can all give you our opinion but that isn't sound advise, just an opinion based on very incomplete information. Before you actually do anything, you will need to pay a local attorney that practices in this area to get the correct answer.
If this is not just idle curiosity, I would advise against asking the company itself.
That could raise questions you might not want to answer, such as 'Why are you asking?', and might trigger them to review the existing documents and work to tighten up any ambiguity.
Posts: 15207 | Location: North Carolina | Registered: October 15, 2007
Originally posted by Aeteocles: The answer will be in the details. It will depend on how the non-compete was written, and how the company was sold and bought. For discussion purposes, it is entirely possible for contract obligations to survive ownership changes and change of business structures. In fact, this is typical, as one of the things being purchased for value in an acquisition are existing contracts with employees, vendors, and customers. You will need to look at the contract language concerning "assignment" and "successors in interest" and have a detailed understanding of how the merger/acquisition was carried out to really make an assessment.
You should also consider if you were ever laid off from one entity and then rehired by another. Look for an actual break in employment. This may have some influence on the outcome.
Additionally, you may be able to find holes in the non-compete itself, as some states make it harder than others to enforce those kinds of contracts.
The best (only) answer by a mile
Posts: 6084 | Location: FL | Registered: March 09, 2009
One other issue that might matter- often one of the reasons for transactions like this is to strip away old liabilities by selling assets but not a going concern. In order to avoid liability on the theory that NewCo is a “mere continuation” of OldCo, the transactions will be structured to make it as clear as possible that NewCo isn’t OldCo. That could help.
New employer will care more about this issue than anyone because, practically, they will be paying the damages if you breach your agreement. I’d give it to them and let their lawyers sort it out.
Posts: 1013 | Location: Tampa | Registered: July 27, 2010
I was an hourly service tech in a specialized field.We leased and sold the equipment and I could teach the customer setup and PM if they chose to do it themselves when/if they bought the equipment but usually we ended up taking the service over. For those interested I worked on equipment that accelerated Stokes Law .
Last June I gave my 2 weeks notice of intent to retire.The company had no one to replace me so I negotiated terms and I worked until Nov 1st.While looking for something today I found the agreement from June.They treated the NC from the original business as current.So that answered my question on that.
Because I wasnt part of the programing and engineering other than to know function and make adjustments I really had no proprietary info.The mechanical side could be backward engineered with the manual provided with the unit.
I think if I decide to pursue this endeavor I will let the company look at the non compete. Thanks for all the replies.
I'm alright it's the rest of the world that's all screwed up!
Non complete contracts usually aren't enforceable. Unless you are using proprietary info, directly competing with them, or stealing business/employees.
If you want to open a coffee shop, be a Walmart greeter, work part time, or become a photographer there is nothing they can do. In many cases of you go into the same field as you we in that's even allowed as long as your not doing the above listed things.
Usually your prospective employer can have their legal department look at the agreement. I've had that done before and the agreement with the new employer is that they would handle anything that materialized from the NC agreement.
Jesse
Sic Semper Tyrannis
Posts: 21252 | Location: Loudoun County, Virginia | Registered: December 27, 2014
Originally posted by Skins2881: Non complete contracts usually aren't enforceable. Unless you are using proprietary info, directly competing with them, or stealing business/employees.
If you want to open a coffee shop, be a Walmart greeter, work part time, or become a photographer there is nothing they can do. In many cases of you go into the same field as you we in that's even allowed as long as your not doing the above listed things.
Usually your prospective employer can have their legal department look at the agreement. I've had that done before and the agreement with the new employer is that they would handle anything that materialized from the NC agreement.
It would be in the same field but working for a company that in some of their process uses equipment from my former employer. If I decide to do it I will let them figure out the legal side of it.
I'm alright it's the rest of the world that's all screwed up!
straight non-compete contracts won't hold water in most states because technically it is stopping you from working in your profession... what they should have done with the initial agreement is give a price that you would have to pay them if you quit and went out on your own depending on how long you had worked for them.
that's my legal opinion based on what I heard in a seminar for service businesses once.
Originally posted by Aeteocles: The answer will be in the details. It will depend on how the non-compete was written, and how the company was sold and bought. For discussion purposes, it is entirely possible for contract obligations to survive ownership changes and change of business structures. In fact, this is typical, as one of the things being purchased for value in an acquisition are existing contracts with employees, vendors, and customers. You will need to look at the contract language concerning "assignment" and "successors in interest" and have a detailed understanding of how the merger/acquisition was carried out to really make an assessment.
You should also consider if you were ever laid off from one entity and then rehired by another. Look for an actual break in employment. This may have some influence on the outcome.
Additionally, you may be able to find holes in the non-compete itself, as some states make it harder than others to enforce those kinds of contracts.
+1 on this.
I’m a retired atty who read lots of non-competes and non-disclosures, and even handled a few disputes surrounding some.
I would only add: Depending on the circumstances of your prior duties, what you are now considering, and how amicable things are/were with the former employer, you could just ask them if they would object to what you are planning. It’s possible they will say “ no problem”.
_____________________________________________________________________ “One of the common failings among honorable people is a failure to appreciate how thoroughly dishonorable some other people can be, and how dangerous it is to trust them.” – Thomas Sowell
Posts: 6617 | Location: Chicago, IL | Registered: December 17, 2007
First it is highly unlikely if competent people worked on these transactions that your obligations were voided. Beyond highly actually. But the enforce-ability of the non compete is somewhat sensitive to its terms. Literally no court would find one valid for more than a year in all but the most unusual circumstances. and other circumstances may have voided it altogether (like consideration). If I was subject to one and sat on the side lines for even a modest amount of time I would not consider it for even a second. enforcing it is expensive and the optics suck for the company unless you are some big big wig.
“So in war, the way is to avoid what is strong, and strike at what is weak.”
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