Fires, Rehires and Non-Competition Agreements: Termination of Employment, No Matter How Brief, May Start the Clock to Run

by Akerman LLP - HR Defense
Contact

An Indiana Court of Appeals has ruled that an employer cannot enforce a two year non-compete agreement against an employee who was fired for just 10 days and then rehired because the termination was treated as permanent and there was no writing signed by the employer that extended the duration of the non-compete agreement as required by the express language of the agreement. Nightingale Home Healthcare, Inc. v. Helmuth, No. 29A04-1403-PL-12 (Ind. Ct. App., August 28, 2014).

In 2008, Nightingale, which provides in-home healthcare, hospice care, and private duty care to residents, hired Carey Helmuth as a patient advocate. As a condition of his employment, Helmuth signed a non-compete agreement, which protected Nightingale's proprietary and confidential information and geographically restricted the employee's ability to compete with Nightingale for two years after his separation of employment.

On October 16, 2009, Nightingale terminated Helmuth for substandard work and violation of company policies. Upon termination, Helmuth's compensation, benefits, and duty to perform ceased and Helmuth began the process of obtaining unemployment benefits. However, within days of Helmuth's termination, Nightingale offered to revoke the termination and offered Helmuth to return to work in the same position as patient advocate subject to the prior terms and conditions of his initial employment including the initial non-compete agreement he previously signed. Helmuth accepted and was rehired within 10 days of being terminated. Nightingale did not ask and Helmuth did not sign a new non-compete agreement upon his rehire.

On March 5, 2012, Nightingale fired Helmuth. In May 2012, Helmuth was hired by one of Nightingale's competitors for a position similar to the one Helmuth had while employed at Nightingale and in a similar geographical market.

Upon learning of Helmuth's new employment, Nightingale sued Helmuth for breach of the non-compete agreement. At issue before the court was whether the non-compete restriction became effective when Helmuth was first terminated on October 16, 2009 or subsequently terminated on March 5, 2012. The court found the former for two main reasons.

First, the court rejected Nightingale's argument that its 2009 termination of Helmuth was voided by Nightingale's revocation of the termination. The court found that the termination was unconditional and intended to be permanent. Second, the fact that Helmuth returned to work on the same terms he previously agreed upon was found irrelevant because the non-compete agreement expressly provided that any extension or modification had to be in writing and signed by Nightingale, and no such executed writing by Nightingale existed. Accordingly, Helmuth's restrictive period was found effective as of October 16, 2009. When Helmuth began employment with Nightingale's competitor in May 2012, the non-compete had expired and was therefore unenforceable.

The Nightingale decision should serve as a reminder to employers to know and comply with the operative language of an employee's non-compete agreement to ensure that the employer's interests remain protected as initially intended. Accordingly, if an employee's non-compete agreement expressly provides that it can only be extended by a signed writing, then a signed writing extending the non-compete must be obtained, regardless of the circumstance that necessitates the extension.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Akerman LLP - HR Defense | Attorney Advertising

Written by:

Akerman LLP - HR Defense
Contact
more
less

Akerman LLP - HR Defense on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!