More than Threats: Consideration and At-Will Employment

One of the basic requirements for contracts, including non-compete agreements, is that the contract/non-compete be supported by “valuable consideration.”  Valuable consideration may consist of “some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.” Simply put, if a party is to be bound to his promise, he must receive something in exchange such as money or another promise.  An employer can condition an offer of employment on an employee’s signing a non-compete; but what about employees who already have a job?

It has become common for an employer to decide after an employee is hired to require an employee to sign a non-compete. An employee is presented with a non-compete agreement and told that if she wants to keep her job then she must sign the agreement.  What must an employee been given something more in return for the non-compete?  South Carolina courts have provided some answers to that question.

In Poole v. Incentives Unlimited, Inc. 345 S.C. 378, 382, 548 S.E.2d 207 (S.C. 2001)(emphasis added), the South Carolina Supreme Court considered the following question:   “[W]hether continued at-will employment is sufficient consideration to enforce a covenant entered into days, months, or even years after the initial employment offer.”  The court held that continued employment was not sufficient consideration for a non-compete entered into after the initial offer of employment.  Id.  “Therefore, we adopt the rule that when a covenant is entered into after the inception of employment, separate consideration, in addition to continued at-will employment, is necessary in order for the covenant to be enforceable.”  Id.

Beat Your Non-Compete Bottom Line:  If you signed a non-compete after you started your job but all you got in return was to keep your current job, then it is not enforceable.  However, if you get a raise or a promotion, then it is a different ball game;  most likely, these will suffice to bind you to your non-compete.

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