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Non-compete and Non-Solicitation blues

Discussion in 'Employment, Labor, Work Issues' started by Raj208, Jun 1, 2019.

  1. Raj208

    Raj208 Law Topic Starter New Member

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    I have been working for a staffing/consulting agency for almost 5 years. I joined them out of an industry role and did sales for the first time. At that time, they had a startup feel and were led by 4 strong partners.I had a good stay and did very well. Generated very good margins for them and made them a lot of money

    They recapitalized with a PE firm about a year ago. Since then, the CEO put in place was let go, and I reported to a total of 3 people over the year. This is in addition to some favoritism that surfaced as well as poor hiring choices that do not generate revenue as they should. Results went down but I kept on trucking. One fine month, 2 of my largest clients stopped buying due to some strategic initiatives and I had quite a few ends. I worked hard to build up my book of business and my sales activity was high. Our President sends me a fairly abrasive and negative email regarding my engagement and results. I walked in with my numbers and quelled the issue. However, it caused me to find another job. I found a place across the street that I fit in better with. They pay 2 - 3x more and run much smoother. Due to the loyalty to my previous employer, I did not ever think of leaving. This new firm provided an offer but it was contingent on me getting released from my "Non-compete" agreement.

    Backstory. When the company recapitalized, I was provided with ownership shares (Class B not A). These shares start vesting after 12 months, equally for 60 months. As part of this ownership agreement, I was asked to sign a non-solicitation. However, it turns out that the old employment agreement (with a non-compete) was assigned to the new company when formed under the PE banner. The Non-compete restricts me from selling the same business in a 50 mile radius.

    Now, back to the new employer asking me to be released from the non-compete. I expressed my intention to part ways and asked for a release of the non-compete, for which in return, I would provide them a much stronger non-solicit (I wouldn't contact anyone they put on a list). However, they chose not to do the release and I quit my job that day. At that point, my offer from the new employer became invalid. Currently, I am trying to work with them selling a different business. However, essentially, I am not allowed to sell what I sold for the last 5 years because of this non-compete. My only choices are to do sales for another type of business or go back to my old industry profession.

    A day ago, I get a letter in the mail stating that the value of my vested shares is $0 based on a good faith estimate by the BOD. I thought no way they're worth $0. However, I don't have a job now and don't have the money for the legal fees it will take to fight it.

    Some people said that the lack of payment on shares may make the employment agreement (including the restrictive covenants such as the non-compete) null and void. However, my ownership agreement didn't have a non-compete. The original employment agreement had that and it was merely assigned to the new company. It appears to be a legal circle jerk.

    Option 1: Sue the prior company and fight the non-compete legally : This may cost thousands of dollars (which I don't have) and it may take a year at which time the restriction will be over.
    Option 2: Someone mentioned go to the EEOC. I just happen to be a minority and the treatment may possibly be discriminatory.
    Option 3: Join the new employer in a different capacity not able to sell what I know how to sell. However, low risk and I just wait my year out there even if I don't make a lot of money. (least risky and most practical option)

    I can provide some of the documents but I have had lawyers review them already. What I was looking for here is some meaningful information regarding my options and some understanding if these are the only options or even to understand them better. I would be happy to pay for legal advice. However, my issue with this is that some lawyers charge a minimum consultation fee and a good amount of them have no experience with staffing agency non-competes. I just don't want to hitch my wagon to something that's a dead end, especially if statistics show that these things aren't worth it. So I'm just looking for meaningful thoughts and any advice. I can provide any text of the agreements as necessary.

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