March 03, 2021 Feature

Did Time Run Out on Employee's Noncompete?

A job change with an employer may require a new noncompete agreement

By Erik A. Christiansen

Employers, beware: A noncompete agreement with a furloughed employee may not be effective when the employee is rehired in a new position. In Russomano v. Novo Nordisk Inc., an appellate court held that the clock on a noncompete agreement began to run when the employer temporarily terminated its employee. The court concluded that the one-year noncompete agreement had expired, and since the employee did not sign a new agreement upon being rehired, the employee was not restricted from working for a competitor. In the wake of this decision, ABA Litigation Section leaders recommend that employers redraft noncompetition agreements to account for potential changes of position in the future.

The employee didn't resign his noncompete when offered a different position at the pharmaceutical company

The employee didn't resign his noncompete when offered a different position at the pharmaceutical company

Photo Illustration by Elmarie Jara | Getty Images

Employee Resigns After Being Thrice Hired and Twice Laid Off

Novo Nordisk, Inc., initially hired Russomano on January 25, 2016, as a Hemophilia Community Specialist for the New England region. As a condition of employment, Russomano signed a noncompete agreement on December 14, 2015. On October 24, 2016, Novo told Russomano that his position was being eliminated, and he was laid off on November 18, 2016. Later, on December 8, 2016, Russomano was rehired as a Hemophilia Therapy Manager for the Penn West region. As a condition of his rehiring, Russomano signed a second one-year noncompete agreement on December 7, 2016.

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