Can a non-compete be enforced if the business closes and then opens under a different name or if the contract is terminated?

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Can a non-compete be enforced if the business closes and then opens under a different name or if the contract is terminated?

My husband is a dentist working for another dentist who owns their own practice. My husband has a contract that has a 6 month non-compete. There is a 90 day clause for either party to give notice.

Asked on May 25, 2012 under Employment Labor Law, Connecticut

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

For a definitive ansewr, you need an attorney to review the precise language of the agreement; a non-compete agreement is a contract, and like any contract, the specific language controls.

That said, a non-compete generally cannot be enforced if the employer terminates the employee (e.g. fires him or her), which includes terminating the employee as part of a downsizing, restructuring, business closure, or general layoff.

On the other hand, if the employee's employment has continued, even if the name of the business has changed, the non-competition agreement would generally still be in force.

And if the employee quits or resigns, he or she would be subject to the terms of the non-competition agreement.

So, in sum: if the employment ended due to something the employer did, the agreement would typically be terminated; if employment does not terminate, or the employee terminates it, it is enforceable.


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