Answers To Your Questions On Noncompete Agreements

I was just going through some of my old blog posts when, what to my wondering eyes should appear, but new(ish) questions on some posts from long, long ago. The post with the most questions is  Non-Compete Agreements - Top 5 Ways To Get Out of Yours, which I wrote in 2010. Since I'm a fan of all things undead, I thought I'd pick a couple of neglected questions and bring them back to life by answering them here.

Please remember that asking me questions in my blog doesn't create an attorney-client relationship, nor are my answers legal advice. I'm glad to discuss legal issues generally and offer my thoughts. Asking here is for public consumption, as are my answers.

Fired 10 Days After Signing Noncompete

Here's a question from Jeremy M:

My state (Kansas) has a law saying employment can be enough consideration at the time of hire, but I can not find anything relating to a condition of continued-employment. After a year of employment with-out a non-compete at a local sales firm I was threatened with my job unless I signed a non-compete. It was during the holidays last year and I was the sole-provider for my family. After a couple of weeks of almost daily mentions I finally signed under pressure, only to be terminated 10 days later. It truly felt like it was a setup.

Do you know where I can research more regarding the consideration clauses of my state? I don't feel I have the resources for a employment lawyer, and am considering self-representation. Thank you for any insight!

 I'm so sorry to hear about this Jeremy. You'd be surprised how common it is for employers to demand an employee sign a noncompete where the only consideration is continued employment, then fire the employee shortly after firing. That's very likely considered fraud in the inducement, which means that they never intended to continue your employment when they demanded you sign, so the fraud might void the noncompete. The elements of fraud in the inducement are: 1) A false statement of material fact; 2) The person making the statement knew it was false or made the statement with reckless indifference as to its truth or falsity; 3) They made the statement knowing you'd rely on it; 4) You did rely on it and were damaged. Sounds like your situation.

Some states also recognize fraud by omission, where one party has special knowledge that the other party couldn't discover, or where they had a duty to disclose, and treat the omission the same as if they'd made a false statement. Unless something really drastic happened in those 10 days, such as losing a major customer or being hit by a meteor, the company probably knew you were going to be fired when you signed.

I looked for a place online that outlines the noncompete laws in all 50 states and found one here by the firm Beck Reed Riden LLP in Boston. Their chart says Kansas is one of the states that allows continued employment as valid consideration. However, if they never intended to continue your employment, that might also be a failure of consideration.

I'd suggest talking to an employee-side employment attorney in Kansas about your rights. You can search for attorneys by state on the National Employment Lawyers Association website. NELA members represent employees.

Can Customers Follow Me If I Don't Have a Non-Compete?

Here's a question from Arsalan:

Hi Donna,
I am switching jobs and going to another company who is a potential competitor to my current employer. There are clients at my current employer who are asking me if they can come to my new employer because they want me to provide them the services. I do not have a non-compete with my current employer. Should I encourage the clients to come to my new employer and it's asking for trouble.

Thanks!

 Hi Arsalan. If you don't have a noncompete, then make sure you don't have a non-solicitation agreement. That's an agreement saying you can't solicit the company's customers to follow you to your new employer or to leave/reduce business with your former employer. If you have neither, then you're probably free to do business with your former employer's customers.

A couple of things come to mind to watch out for. If the customers have contracts with your former employer, don't ask them to or encourage them to break or cancel the contracts. You might get sued for something called tortious inteference with a contractual relationship. If the customer already left them or intends to leave them, then you probably won't be tortiously interfering.

If the company has a confidential customer list, then be careful. You might get accused of violating trade secrets law if you take the customer list with you and start using it. You're better off using publicly available information if you can. For instance, if you sell a computer program for banking, get a banking directory or Google "banks" and start from there. In most states, publicly available information is not a legitimate interest for your former employer to protect even if you do have a noncompete.

When in doubt, talk to an employment lawyer in your state about your rights and responsibilities. Good luck!

That's all for the zombie Q&A for now. I'll try to resurrect some old questions again in a future post.