Court Thwarts Employer’s Effort To Block Vested Profit-Sharing Plan Participant from Obtaining Employment with a Competitor

Other than to protect good will or trade secrets, a non-compete provision intended to prevent a former employee from acquiring an interest in, or becoming an officer or director of, a competitor of the ex-employer may not be enforceable.

 

Summary of the case:  A stand-alone agreement executed by employee-participants vested in their employer’s profit-sharing plan contained an unusual non-compete provision.  It prohibited participants, for five years after termination, from owning or becoming an official of a “similar” trade or business located within 25 miles of the employer’s facility in Columbus, Nebraska. 

 

To read more about this case, click here.