Non-compete agreements are an essential instrument in many employers’ toolkits. But what happens to these agreements when an employee is laid off or let go due to economic downturn? In a small subset of states, such conditions could render non-compete agreements unenforceable.
A recent Montana Supreme Court decision suggests that restrictive covenants are not likely to be enforced when an employer fires an employee without cause in Montana. The decision is both consistent and inconsistent with the opinion of other courts around the country.
Many people believe that an employer cannot enforce a non-compete agreement against an employee whom it has fired. But the Pennsylvania Superior Court just weighed in with a new opinion stating that courts must consider factors extending beyond whether and why the employee was fired.
Many employers with offices or employees located in multiple states use the same non-compete/confidentiality agreement in each state in which they do business. Typically, the form of the non-compete/confidentiality agreement originated in the employer’s home state, and the employer went on to use this same agreement wherever the employer does business. However, these employers may find out too late that a non-compete/confidentiality agreement enforceable in their home state may not be enforceable in another state.