Facts
- Summits 7, Inc., a Vermont company providing printing and copying services, hired Staci Lasker (formerly Kelly) in January 2000 as an at-will employee.
- Lasker received promotions, increased responsibilities, and raises during her employment, including moves into sales and supervisory work.
- In January 2001, after employment began, Lasker signed a noncompetition agreement barring her for one year after voluntary resignation or termination for cause from working for a competitor in Vermont, New Hampshire, or a designated part of New York.
- In October 2002, after Summits 7 expanded its business, Lasker signed a second noncompetition agreement with similar restrictions.
- Lasker voluntarily resigned in April 2003 and began working in June 2003 for Offset House, Inc., a nearby competitor in Essex Junction, Vermont.
- Summits 7 sued to enforce the covenant and sought an injunction preventing Lasker from working for Offset House.
Issues
- Whether continued at-will employment, without additional compensation or benefits, is sufficient consideration to support a noncompetition agreement executed after employment has begun.
- Whether the covenant’s geographic scope was unreasonably broad and whether the trial court erred by enforcing the covenant without explicit findings on geographic reasonableness.
Decision
- The Vermont Supreme Court affirmed the judgment enforcing the noncompetition agreement.
- The Court held that continued at-will employment can constitute sufficient consideration for a noncompetition agreement entered during employment.
- The Court declined to reverse or remand on the geographic-scope challenge, concluding that the conduct at issue fell within a clearly reasonable application of the restraint.
- The injunction (as extended by the trial court) and the award of attorney’s fees to Summits 7 remained in effect.
Legal Principles
- In an at-will employment relationship, an employer’s continuation of employment may supply consideration for a noncompetition agreement executed mid-employment.
- This consideration theory rests on the employer’s forbearance from immediate termination and the employee’s continued employment under the new terms.
- A noncompete supported by continued at-will employment is enforceable absent bad faith, such as discharge shortly after execution to avoid the employer’s obligations.
- Appellate relief on the outer limits of a covenant’s geographic scope may be unwarranted where the employee’s challenged employment constitutes direct competition in the employer’s primary local market and plainly violates a reasonable core restriction.
Conclusion
The court upheld enforcement of a mid-employment noncompete, holding that continued at-will employment is sufficient consideration and declining to disturb enforcement on geographic-scope grounds where the employee joined a direct competitor in the same local market.