Q. I was recently let go from my job with a large corporation. I had no write-ups and was given no warnings, and I believe that I was wrongfully discharged. What can I do to protect my rights?
A. North Carolina is an "at-will" state. This means that a private employer may discharge an employee, with or without notice, for any reason or no reason at all. There are, however, a few exceptions. If the discharge was for an illegal reason, an employee may have a claim for wrongful discharge against the employer. For example, it is illegal to discriminate in employment based on race, gender, age (over 40), disability or national origin. Also, an employee may not be discharged for engaging in certain "protected activity" such as filing a workers compensation or wage and hour claim, or making an OSHA (or NCOSH) complaint. An employer also may not discharge an employee for a reason that violates public policy. Although there is no comprehensive definition of public policy, the North Carolina courts have applied this exception where an employee was discharged for refusing to violate the law, or where the employer itself violated the law in discharging the employee.
Some employees are protected by collective bargaining agreements which limit an employer's right to discharge the covered employees. A small number of employees have employment contracts that specify the length of time that the employee will remain employed; employees with this type of agreement may only be terminated in accordance with the terms of the employment contract.
An employee who believes that he or she was discriminated against because of race, gender, age (over 40), disability or national origin should contact the Equal Employment Opportunity Commission. Those who believe that they have been retaliated against for engaging in protected activity should contact the North Carolina Department of Labor. Regardless of whether or not there has been a wrongful termination, a discharged worker may apply to the local Employment Security Commission for unemployment benefits.
Q. My employer required me to sign an agreement saying that I will not take a job with a competitor for two years after leaving the company. Am I really restricted from working for a competing company? How can I be restricted from working in my field of specialty?
A. In general, covenants not to compete (also called noncompete agreements) are disfavored because of the inherent restrictions such agreements place on the ability of employees to change jobs. However, under North Carolina law, these agreements may be enforceable if certain conditions are met. The first is that the agreement must be entered into to protect a legitimate business interest of the employer. The employer's desire to limit competition is not a legitimate purpose -- the employer has no right to restrict reemployment based solely on a desire to limit competition. However, if the employer has another business reason (such as an investment of special training or the disclosure to the employee of proprietary information), the noncompete agreement may be enforceable if the other conditions of enforceability are met.
An employer must also provide consideration -- money or other benefit -- to the employee for signing the agreement. If the agreement is required as a condition of employment, the hiring of the employee is sufficient consideration. If the agreement is entered into later in the employer-employee relationship, the employer must provide something of value, such as a raise or one-time payment, in order for the agreement to be enforceable.
Courts will enforce a covenant not to compete only when it is reasonable as to time and geographic scope. What is reasonable depends on the facts of each case, and the time and territory factors are interrelated (e.g. a longer time may be reasonable if the geographic restriction is very narrow). Any questions about a specific noncompete agreement should be directed to an attorney for review.