COA: Break in employment triggered non-compete agreement

August 28, 2014

A man who joined a competitor immediately after his employment ended at another company did not violate a non-compete agreement, the Indiana Court of Appeals ruled Thursday. The judges agreed that a 10-day break in employment with the prior employer two years earlier constituted the beginning of his non-compete agreement, and his new job falls outside that two-year non-compete restriction.

Carey Helmuth worked at Nightingale Home Healthcare Inc. as a patient advocate. When he joined the company Jan. 24, 2008, he signed a non-compete agreement barring him from working with a company in a similar field and in a similar position for two years after separation from the company.

In October 2009, Nightingale fired him. But 10 days later, the company offered to revoke the termination and allow him to return to his prior position. He returned to work for Nightingale Oct. 26, 2009, but did not sign a new non-compete agreement. Helmuth’s employment ended with Nightingale March 5, 2012, and he began working with Physiocare Home Healthcare LLC as a patient advocate almost immediately.

Nightingale sued Helmuth and its competitor, arguing he breached the non-compete agreement. The trial court ruled in favor of Helmuth and Physiocare, agreeing with the defendants that the non-compete agreement expired in October of 2011 due to the break in Helmuth’s employment.

“Despite Nightingale’s characterization of Helmuth’s rehire as a revocation and rescission of the previous termination, we find that, based on the evidence, Nightingale’s conduct is more properly defined as a separation from the company which was unconditional and intended to operate as a permanent termination of the employment relationship between Nightingale and Helmuth,” Judge Patricia Riley wrote in Nightingale Home Healthcare, Inc. v. Carey Helmuth and Physiocare Home Healthcare, LLC, 29A04-1403-PL-121.

“Mindful that non-compete agreements are disfavored by law and strictly construed against the employer, we conclude that there is no issue of material fact that Helmuth was indeed separated from Nightingale on October 16, 2009, which marked the starting point of the two-year restrictive period of the Non-Compete Agreement,” she continued. “Absent the execution of a new non-compete agreement on October 26, 2009 or a written extension of the prior Non-Compete Agreement, Helmuth’s restrictive period ended on or about October 16, 2011. Therefore, at the time of entering into an employment relationship with Physiocare in May of 2012, Helmuth was no longer bound by the provisions of the Non-Compete Agreement.”



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