“Does leaving an employer, and then returning, relieve me from a non-compete agreement I signed the first time I was hired?”

Question: I worked for a company for about a year. When I started, I signed a non-competition agreement that had a three-year term of non-competition.

Then I quit. As proof that I quit, I could even show that the employer cancelled my health insurance for that three weeks.

Three weeks later, I was rehired, but this time I did not sign a new non-compete agreement.

That was four years ago. I just got fired and got a letter from the company attorney telling me that the non-competition agreement was somehow in full force and effect.

Is the “old” non-compete enforceable? Even if they go back to the time I quit, the three years was up. How can they say the non-compete is still in effect if I didn’t sign a new one when I came back to work?

         Elkhart, Indiana

Answer: Erika, you present a very interesting question, one that I don’t think I have ever heard before. Because your question concerns the meaning and effect of an agreement, the first thing a Court would do is to focus on the exact words used in the agreement. So that’s where we must start: with the words of the non-compete (also called a non-competition agreement.)

1. I have never seen a non-competition agreement provide that it is effective only the “first time I leave” the company, or, for that matter, “each time I leave the company,” either. Usually the words of a non-compete agreement read this way, or quite close to it: “If I should leave the company, either voluntarily or involuntarily, I promise not to go to work for a competitor for a period of one year (or two years, etc.). The words do not say “first time I leave,” or “each time I leave.” They only refer to “if I should leave.” Thus, if your non-compete agreement is like most, it is just not clear if you are restricted on this, your “second” time leaving. There probably is an ambiguity in the wording of the agreement.
2. A general rule of interpreting agreements is this: if it is unclear, it is interpreted against the interests of the drafter.  Does your non-compete agreement cover each and every time you leave the company? If it is not clear, the law would usually interpret it against the view of your company, that is, in your favor.

3. Three years is so long to limit someone’s freedom to work that, these days, most courts would find your agreement void, and of no effect, because it is just unreasonable.  More and more, judges are reluctant to keep people out of work without a very, very good reason. My experience is that no judge would ever seek to restrict you for that period of time. Indeed, most judges would likely find your agreement totally unenforceable, due to its unreasonable duration.

My suggestion is that you put these thoughts into a letter to the company’s CEO or President, and ask him or her for a written letter or email that they will not seek to interfere with your making a living, because (a) the agreement is unclear, at best, regarding its effect on a person leaving for the second time, (b) the company attorneys wrote the agreement, and they are the ones who are to blame for its ambiguity, and (c) it is so long so as to likely be simply found unenforceable if it ever got to Court. (You might even send him or her a copy of this Q & A.) Your letter must be sent in a verifiable manner, such as by Email, Certified Mail, Return Receipt Requested, or by FedEx or UPS.

Most importantly, I would tell the CEO or President that, if the company hurts you, or your family, or your career, you intend to ask a jury to find the company – and the CEO or President – fully liable for the damages they cause.

That may do the trick. Otherwise, you might just need to hire an employment attorney to try to get yourself out of this predicament.

Though my view of your dilemma is likely not as clear as you might have liked, I hope this is helpful to you.  Good luck.

Thanks for writing in. Hope you come back to our blog again and again. Consider subscribing – it’s free!! 

           Best, Al Sklover

P.S.: Received a “Cease and Desist” letter from your former employer’s attorney? Concerned you might receive one? We offer a Model Letter entitled “Response to Attorney’s ‘Cease and Desist’ Letter Alleging Non-Compete Violation.” It shows you “What to Say, and How to Say It.™” To obtain a copy for your adaptation and use, just [click here.] Delivered by Email – Instantly! 

©  2010 Alan L. Sklover, All Rights Reserved.

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