Are Non-Compete Agreements Assignable?
This is not a question that comes up very often. But, earlier this year, Monroe County Supreme Court denied a motion for preliminary injunction where there was a sharp factual dispute over this issue.
In this case, an employee signed an agreement containing a non-compete clause shortly after being hired. The agreement lacked some of the typical boilerplate language, including a clause expressly authorizing the employer to assign the agreement. The employee thereafter worked for the employer for nearly a decade. After the employer announced that its assets were being acquired by a large national company, the employee resigned from his position and signed with a competitor. The employer immediately sued and sought a preliminary injunction, claiming that its former employee’s new employment with its competitor would violate the non-compete provisions in its agreement.
Restrictive covenants are only assignable without the parties’ consent if that is what the parties intended when the agreement was originally executed. Although the employer claimed that it intended the agreement to be assignable, the employee pointed out that the agreement did not include an assignment clause, and he did not intend or otherwise expect that it would be assignable to the national company acquiring his former employer.
The Court denied the motion for preliminary injunction, finding serious questions as to whether the agreement was assignable. The Court also found serious questions about whether the agreement was otherwise enforceable, but we wanted to highlight the assignment issue because this might have been avoided if the parties had included assignment language in the agreement at the outset.
If you would like to schedule a consultation to talk about restrictive covenants in employment, please feel free to contact Peter Weishaar at firstname.lastname@example.org or (585) 512-3542. Peter also writes a law blog, the Rochester Law Review, covering legal developments, cases of interest, and events happening in all of the key areas of his practice. Peter's employment practice includes the representation of businesses and individuals in matters involving restrictive covenants, non-compete agreements, discrimination and failure to pay wages in State and Federal Courts, and before administrative agencies, including the New York State Division of Human Rights and the United States Equal Employment Opportunity Commission.
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