Non-compete agreements valid despite moves, mergers

Suppose a Massachusetts employee signs a non-compete agreement, but then leaves to work for a competitor in California – a state that generally doesn’t approve of non-compete agreements. Can the agreement still be enforced against him?

Yes, according to a recent decision by a Massachusetts court. The employee was a vice president at the EMC computer company Massachusetts. After 20 years with EMC, he quit to become vice president at Hewlett-Packard in California. The employee had signed an agreement saying that if he left, he wouldn’t work for a competitor for a year. When EMC sued, he argued that the agreement wasn’t valid because it violated the law of California. But the Massachusetts court said that while that might be true, the agreement was still valid in Massachusetts, and Massachusetts law applied – so the employee was out of luck.

In another case involving non-competes, the Nevada Supreme Court decided that a non-compete agreement continued to be valid even though the employer had merged with another company. The employee argued that the agreement couldn’t be enforced because the company that was trying to enforce it was the product of several mergers and the original agreement was only with one of the companies involved in the mergers.  But the court said this didn’t matter, because the surviving company had the right to enforce agreements made by the merged corporation.