An employee recently posted on Reddit that his former employer demanded that he sign a non-compete agreement a month after he had been fired and found another job with a competitor.
Feeling stressed and not knowing what to do, the person turned to the Reddit community, asking for advice with a post that was titled: “My former employer is forcing me to sign a non-compete clause after I found a new job in a month after they fired me.” The employee was put on a performance improvement plan after he had undergone radiation therapy, and was subsequently fired.
The employee does not mention the name of the company but writes:
Well just this Sunday morning, I get an email from the in-house hiring manager for my former employer. They told me that I need to sign a contract agreeing that I would not accept employment from another company that i sin direct competition with them for the next 3 years. They told me that I have until Friday to send the documents back with my signature, or serious litigious consequences will follow.
What should I do? It’s been more than a month since they let me go and I have already been accepted into a company that does exactly the same type of work that they do. It seems like they want to make me unemployed or make it difficult for me to find work elsewhere. I am very new to my industry and I only recently got a promotion. I honestly don’t need any of this stress. What should I do?”u/WhitePinoy
Can an employer do that? Force an employee to sign a non-compete after they had already left employment?
The answer is “no.” While state laws regarding non-compete restraints very widely in each state, there is no state that allows a party to force another party to sign a contract.
In fact, even if this company had offered a substantial sum of money to the employee to sign the non-compete and resign from his new employment, that contract, in many states, would not be enforceable because simply paying money for a non-compete agreement may not be sufficient legal consideration.
This situation is an example of the type of abuse of non-compete restraints that is driving the push to ban all non-compete agreements, even though a lot of such agreements are reasonable and serve to protect legitimate business interests.
Can an employer force an employee to sign non-compete restraints mid-employment?
This brings up another common question: can an employer force an employee to sign a non-compete mid-employment?
The answer is also “no.” No one can force an individual to sign a contract. That being said, employers in many states can freely fire “at-will employees” if they refuse to a sign a non-compete agreement. However, refusing to sign a non-compete agreement mid-employment in itself would not have legal consequences or give grounds for an employer to sue an employee.
CONCLUSION: While an employer can usually fire an employee for refusing to sign a non-compete agreement, an employer typically will not be able to sue an employee for a simple refusal to sign an agreement. So, if an employee has already resigned or was terminated, employer’s only leverage – threat of termination – is gone, and any attempts to bully an employee into signing a contract after the termination of employment should be ignored.
Leiza Dolghih is the founder of Dolghih Law Group PLLC. She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at firstname.lastname@example.org or (214) 531-2403.