A recent case in Indiana emphasizes that an employer must carefully consider how its actions will affect a non-competition agreement with its employees. Nightingale Home Healthcare, Inc. v. Helmuth, 29A04-1403-PL-121 (Ind. App. 8/28/14). A home health care employee signed a non-compete when he was hired, which restricted him from working for a competitor for two years after his employment ended. A year later, the employee was let go. He was required to turn in company equipment and property, his badge and keys. Ten days later, he was re-hired for the same position, as a patient advocate, for the same salary and benefits. He did not have to reapply or fill out new-hire paperwork. He did not sign a new non-compete. The patient advocate continued working for Nightingale for another three years.
After the employee’s employment with Nightingale ended, he began working for a competitor. Nightingale sued him for breach of his non-compete agreement. Nightingale argued that the original non-compete agreement was still in force, because his brief separation from the company earlier was revoked/voided when he was rehired 10 days later. However, the trial and appellate courts disagreed, holding that the break in the patient advocate’s employment triggered the running of the two-year non-competition clock from his agreement.
When an employer has to terminate employment, it should not rely on a previously signed non-competition agreement if it later re-hires the employee. A new agreement should be signed. A periodic review of employee files is recommended.