2005 VT 97 (2005).
One-Sentence Takeaway: Continued employment alone is sufficient consideration to support a covenant not to compete entered into during an at-will employment relationship.
Summary:
Defendant was an at-will employee of Summits. She signed a noncompetition agreement during her employment. In exchange, Summits agreed to not terminate Defendant’s employment.
After Defendant left Summits, she started working for a competitor. Defendant argued that the noncompete agreement was not enforceable for lack of consideration.
The superior court enjoined Defendant from working for a competitor. The Supreme Court of Vermont affirmed.
The Court ruled that continued employment alone is sufficient consideration to support a covenant not to compete entered into during an at-will employment relationship. Because an at-will employee can be fired without cause at any time after they are first hired, the consideration is the same and it doesn’t matter at point the noncompetition agreement is signed. In either scenario, the employee is agreeing not to compete for a given period following employment in exchange for either initial or continued employment.