Is My Noncompete Enforceable If I'm Fired Without Cause?

Don't assume your non-competition obligations end when you're fired

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Wow!

When I wrote an article on How Do I Get Out Of My Noncompete Agreement?, I found out that AOL Jobs readers have lots of questions about noncompetes, and I don't blame you. I get people in my law practice asking me questions on non-competition agreements every week. That's because most people don't even realize they've signed something saying they can't work for a competitor for a year or two after they left, or they thought (wrongly) that a non-competition provision couldn't be enforced. I'm going to answer some reader questions This week, I answer:

Is My Noncompete Enforceable If I'm Fired Without Cause?

I read the article about the top 7 ways to get out of a non-compete, but what if the former employer lets you go? No negative reason for the dismissal, just trying to cut costs. Then do they still have the possibility of winning a court battle to keep me from working?

I wish I had a simple answer, but it will probably depend on your state's law and the language of the noncompete. Here are some things that may affect the enforceability of your non-competition agreement if you're fired:
  • Agreement says you can only be fired for cause: If you had a lawyer when you negotiated your agreement, or if you're very lucky, you may have an employment agreement saying you can only be fired for cause. If that's the case, then the employer breached the agreement when they fired you with no cause and you may have a good defense to enforcement of the noncompete obligations.
  • Employer breach: If the agreement says your employer has to pay you salary or benefits you never got or that they changed without a new agreement, they may also be in breach of the agreement. I'd suggest having an employment lawyer in your state help you comb through the employer's obligations (if any) under the agreement and see if you have any argument that they breached.
  • State law: Montana is the only state in the nation that isn't an at-will employment state, so it isn't too surprising to hear that they don't enforce noncompetes against employees who were fired without cause. New York is another state that doesn't enforce noncompetes where employees are fired without cause. Most states do enforce noncompetes against fired employees. Other defenses your state may or may not offer are bad faith, breach of covenant of good faith and fair dealing, and violation of public policy. Some states have laws that let an employee buy out of the noncompete for a percentage of their annual salary. California doesn't enforce most noncompetes, and it looks like Massachusetts may also soon pass laws against noncompetes.

I personally think employers who toss an employee aside shouldn't be allowed to enforce noncompetes against them. If you agree, tell your legislators to make your state laws on non-competition more fair. Better yet, encourage your member of Congress to sponsor a law making noncompetes limited to truly legitimate business reasons like trade secrets.

My state, Florida, general allows employers to enforce noncompetes against fired employees. I'd love to hear from colleagues in other states who have ideas about how to defend against noncompetes being enforced when employees were fired without cause. If you have another way to help, please write about it in the comments section.

Next week, I'll answer whether your noncompete is enforceable if you move out of state.


If you need legal advice, it's best to talk to an employment lawyer in your state, but if you have general legal issues you want me to discuss publicly here, whether about discrimination, working conditions, employment contracts, medical leave, or other employment law issues, you can ask me at AOL Jobs. While I can't answer every question here, your question might be featured in one of my columns, or in an upcoming live video chat.
Donna Ballman

Donna Ballman

Contributor

Donna Ballman’s book, Stand Up For Yourself Without Getting Fired: Resolve Workplace Crises Before You Quit, Get Axed or Sue the Bastards, was the Winner of the Law Category of the 2012 USA Best Books Awards and is currently available for purchase. Donna is the award-winning author of The Writer’s Guide to the Courtroom: Let’s Quill All the Lawyers, a book geared toward informing novelists and screenwriters about the ins and outs of the civil justice system. She’s been representing executives, physicians and employees in Florida, including negotiating severance agreements and litigating discrimination, sexual harassment, noncompete agreements, and other employment law issues since 1986. Her blog on employee-side employment law issues, Screw You Guys, I’m Going Home, was named one of the 2011, 2012 and 2013 ABA Blawg 100 best legal blogs, Paralegal 411’s Top 25 Labor and Employment law Blogs of 2013 and the 2011 Lexis/Nexis Top 25 Labor and Employment Law Blogs.

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