Is a non-compete agreement binding if the company is no longer in business?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Is a non-compete agreement binding if the company is no longer in business?
I am hiring a person who has the following history. She signed a non-compete agreement for a company who (in debt to IRS) went out of business. The owner started a new business and retained some employees including my candidate. She did not sign a non-compete for the new company. Sometime later, she was laid off and warned about the non-compete (even though she didn’t sign one for new company) Is she, or I bound, by this agreement?
Asked on October 7, 2010 under Employment Labor Law, Washington
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
The best thing that you can do here is to get some legal advice from an employment attorney in your state. It is my understanding that these agreements are not favored but are enforced in Washington State. They appear to use a "reasonableness" standard and a three prong test including "legitimate business interest" of the employer. If they limit merely for time and distance (2 years and 500 miles, say) then these restraints are looked at even more closely. Remember that it is ultimately a contract as between two parties. Did her boss sign the agreement as owner of the old company and in the old company's name? Then think that he may be had pressed to enforce it. But as I said, seek legal consultation. Good luck.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.