Wrigg v. Junkermier, Clark, Campanella, Stevens, P.C.: The Effect of Involuntary Termination on Post-Employment Non-Compete Agreements
While this author agrees with the Wrigg Court’s ultimate decision, the Court’s overall discussion was lacking on three points. First, before determining whether an agreement has the requirements of an enforceable noncompete clause, the Court should have addressed the contract issues involved in Wrigg. In particular, the Court should have addressed the question of consideration and the potential ambiguity surrounding the terms of the shareholder agreement. If the agreement is an unenforceable contract, enforceability of the non-compete clause becomes irrelevant. Next, even if a contract is enforceable, a non-compete clause within it is not automatically enforceable. As a general rule, post-employment, non-competes are allowed if they fall within certain parameters, one of which is the reasonableness of the clause. Although an inexact science, such a determination usually depends upon the use of a balancing test. As part of that balance, courts should consider the evolving psychological contract. The modern employer-employee relationship is based on an unspoken promise by the employer to ensure the employee is competitive in the job market, and courts should examine whether it makes sense to enforce a non-compete agreement under such circumstances. This is especially true in Montana, where an employer can impede the employee’s strong statutory protections against wrongful discharge by asking her to sign a term employment agreement— effectively turning her into a quasi at-will employee. Finally, the Court’s unclear position regarding how “for-cause termination” may affect the enforceability of non-compete agreements provides little guidance to district courts on how they should decide future cases. As such, it is likely that some trial courts will see Wrigg as a per se prohibition against noncompete agreements when the employee is involuntarily terminated; while other courts may interpret Wrigg in such a way that allows them to look to the circumstances of termination prior to determining the enforceability of the non-compete agreements. In failing to adequately address this critical issue, the Wrigg Court has invited inconsistent application among Montana’s district courts and an inevitable revisiting of the issue for a more definitive clarification.
Michelle H. Vanisko,
Wrigg v. Junkermier, Clark, Campanella, Stevens, P.C.: The Effect of Involuntary Termination on Post-Employment Non-Compete Agreements,
74 Mont. L. Rev.
Available at: https://scholarworks.umt.edu/mlr/vol74/iss1/10