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First post on here after doing a ton of Google searching on this topic. Roughly five years ago, I began work at Company A. In my offer letter, there was no mention of my employment being dependent on a non-compete being signed (I still have the original offer letter). A week after I signed that offer letter, I was presented with my new hire information, which contained the employee handbook and a non-compete that I had to sign and send back prior to my first day. The first paragraph of that non-compete reads:

Employee has received an offer of employment from Company, which offer was expressly conditioned upon Employee’s agreeing to the terms contained in this Business Protection Agreement (“Agreement”). If Employee executes this Agreement and commences employment with Company, Employee will be employed in a position of trust and confidence and will have access to and become familiar with Company’s products, methods, technology, services, procedures, and customers.

Is it required for employers to make mention of a non-compete in their offer letters, and if they don't, is the non-compete even enforceable?

Fast forward a few years, and Company A is sold to Company B. In that same non-compete I signed all those years ago, is the following:

Successors/Assignment. This Agreement may be assigned by Company, and shall automatically inure to the benefit of Company’s successors and assigns and shall be enforceable by Company’s successors and assigns. This Agreement cannot be assigned by Employee, and shall be binding upon Employee’s heirs, executors, and administrators.

Even if this non-compete is now being enforced at Company B, is my original one even valid due to my employment offer never mentioning the requirement of a non-compete being signed?

*Edit. Thank you, everyone, for the replies. Here's a bit more detail on what the non-compete is specifying, in regards to post-termination:

Post-Termination Customer-Based Restrictions. Employee agrees that for a period of one (1) year after the termination of his/her employment with Company, without regard to whether such termination is voluntary or involuntary and without regard to the reason (if any) for the termination, Employee will not, directly or indirectly, on his/her own behalf or as an owner, partner, principal, officer, director, shareholder, employee, consultant, contractor, agent or in any other capacity on behalf of another person or entity, solicit, provide, or sell, or attempt to solicit, provide or sell, products or services that are the same as or similar to, or directly or indirectly competitive with, those that Company offers, to any of the following people or entities:

(1) Any person or entity that was a customer of Company within the two year period immediately preceding Employee’s last day of employment with Company, and (2) Any person or entity that was a potential customer of Company during the two year period immediately preceding Employee’s last day of employment with Company. A potential customer is defined as any person or entity that Company directly or indirectly solicited or attempted to provide products or services, or a person or entity that contacted Company regarding Company’s products or services.

Only reason I am bringing this up is because I found a case with a similar situation as mentioned in this post: https://www.noncompetereport.com/2017/11/minnesota-court-appeals-reaffirms-non-compete-must-part-job-offer-prospective-employee/

In this case, the court ruled that since a non-compete was not presented at the time of the employment offer, there was no consideration for signing it, and it was not enforceable as a result. Only difference I have not left company B to start my own company (or work for a different company) with the intent of soliciting customers of Company B; just looking to get some opinions.

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    The fact that it was not included in the offer letter in no way detracts from its enforceability. There are reasons that a non-compete might not be enforceable, that are addressed, but absence from an offer letter is not one of them. – ohwilleke Mar 13 '18 at 16:33
  • @ohwilleke, what do you make of the court's decision, then? " When a non-compete agreement is not specifically made part of the offer of employment, i.e., ancillary to the employer’s offer and employee’s acceptance, there must be independent consideration for the non-compete. This holds true whether the non-compete is presented to the employee on the first day of employment, or the tenth year of employment." – A.fm. Mar 13 '18 at 19:47
  • OP, I think somewhat due to my general answer and even more due to your specific one (e.g., the article you posted), you've basically got your answer, right? What further are you asking? The difference between you and the person in the case you cited is that you can't bring a suit because you have no cause of action. In other words, you'd go to a court and say "this happened" and the reply would be "so what?" because there is no harm being caused that the court can fix. – A.fm. Mar 13 '18 at 19:50
  • @A.fm. Offering additional consideration when the new agreement is signed is routine common in states that require it. It wouldn't have to be a lot - a gift card for dinner and movie or $100 would do. – ohwilleke Mar 13 '18 at 21:04
  • Okay, but the case says that absence from an offer letter is a reason a non-compete would not be enforceable provided there is not further consideration. – A.fm. Mar 13 '18 at 22:36
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Simply signing an agreement like this does not mean it's valid. There are way too many facts unknown at this point to determine what a court might do. OP, what you've provided does not tell us about your non-compete agreement. Are you barred from opening the same business within a certain radius? Are you barred from using any intellectual property - even that which you developed while working there - in a future venture? Are you barred from recruiting for another company from this company in the future?

Often, such agreements are not enforceable due to unreasonableness. Often this comes when the employer tries to geographically limit an employee's future business actions. The courts rarely favor provisions that would hinder someone's ability to make a living in such an onerous way. However, this varies by state. Usually such an agreement will restrict where you work, as I mentioned, and/or protect a company's trade secret. If the agreement is too broad (for example, if you leave Company A, the only way you can uphold your side of the contract is to move to another state to work), it will be tossed out.

States will vary in a) whether and to what extent they allow non-compete clauses, (for example, California has simply outlawed them for anything other than equity stakeholders in business sales), b) to what extent an employer must prove a specific restriction is necessary to prevent an unfair advantage by your (hypothetical) new employer, and c) what things and/or ideas may be considered a business' trade secret.

Generally speaking, to be held valid, a non-compete agreement must 1) be supported by consideration when it's signed, 2) protect a legitimate business interest of the employer, and 3) be reasonable in "scope, geography, and time."

So, keeping in mind that the employer must identify a specific legitimate business interest and the entire potentially litigated case would largely revolve around the reasonableness of the agreement, what precisely are you identifying as a problem with the agreement you signed?

  • Your general answer of "it depends on the exact terms of the agreement and where you are" applies outside the US too. In both England and Wales, and Switzerland the enforceability depends on the precise terms (jurisdictions chosen because I know my statement is true of them). It might be worth commenting that the particular point the OP raises ("the non-compete wasn't mentioned in the offer letter") probably doesn't invalidate the agreement - but the OP would need personal, paid-for, advice to answer that. – Martin Bonner supports Monica Mar 13 '18 at 7:46
  • I've just noticed the OP specifies the jurisdiction in his title: Minnesota. Does that make a difference? – Martin Bonner supports Monica Mar 13 '18 at 7:48
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    I think going that specific would fall under the territory of needing "personal, paid-for, advice." The basics are the same, it's just how each state interprets them. In other words, for example, there will always be a determination of legitimate business interests of the employer, but what each state considers "legitimate business interests" may vary drastically. – A.fm. Mar 13 '18 at 7:53
  • @MartinBonnersupportsMonica - not being mentioned at the offer stage is actually critical, as this was the point where consideration would have taken place. The potential employee would be making the decision to give up their freedoms in exchange for the job offer, the job offer has already been made, so no consideration can occur at this point. Effectively they've put the employee between a rock and a hard place, they may already have given notice on their old job, and if they don't sign the surprise NDA, they are unemployed. – ThomasRedstone Nov 9 at 0:38
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You signed it so it’s valid

By signing it you agreed to be bound by its terms - if you had an issue with it erroneous referring to something in the offer that wasn’t there then the time to raise that was before you signed it.

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    Nowhere near enough info to make this statement! – A.fm. Mar 13 '18 at 7:03
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    If he hadn't signed it, it wouldn't be valid (possibly), but signing an unenforceable agreement doesn't make it enforceable. – Martin Bonner supports Monica Mar 13 '18 at 7:42

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