A recent ruling from the Eighth Circuit federal appeals court recently ruled that non-compete agreements may transfer from one company to another. The case involved X-ray technicians in Missouri who left their company after another company acquired it. The court ruled that they were still bound by the original non-compete and confidentiality agreements they signed with their employer.
Both of the X-ray technicians in the case had signed non-compete agreements with their employer. When their company was bought, the two technicians were offered contracts with the acquiring business. The employees declined, as they would have had to transition from full-time to part-time status. As the employees are still bound by the non-compete, it may be quite difficult for them to find other employment.
Employees May Be Exempt of Terms of Employment Change
In her opinion, the Eighth Circuit judge wrote that the non-compete agreement may not be applicable under the new company if the terms of employment have been altered or there were special circumstances concerning the first employer. The ruling reversed the summary judgment to the purchasing company and remanded the case to a trial court. When the case comes to trial, the employees can argue that upholding the non-compete agreements puts them in the difficult position of choosing between unsatisfactory work conditions or potentially prolonged unemployment.
The judge also wrote that non-compete agreements were inherently different from personal services contracts, which typically cannot be transferred to another company without employee consent. A personal services contract requires employees to act according to the terms, while a non-compete only compels employees not to act in certain ways. This particular case was judged according to Missouri employment laws, but each state has its own set of rules governing non-compete agreements.
Philadelphia Employment Lawyers at Sidkoff, Pincus & Green Advocate for Workers Bound by Non-Compete Agreements
Philadelphia employment lawyers at Sidkoff, Pincus & Green have been successfully representing Pennsylvania workers for over 60 years. Our knowledgeable, experienced lawyers understand the complexities of non-compete laws in Pennsylvania and will prepare a sound legal strategy to win you the best possible outcome in your employment dispute. With offices conveniently located in Center City Philadelphia, we serve clients throughout Southeastern Pennsylvania and New Jersey. Call us today at 215-574-0600 or contact us online to review your case.