Third Circuit Enforces Non-Compete Agreement Posted on Internet

Jonathan Korn

aa559a96d2ef7db0cff214478e922bd7Our society is becoming increasingly paperless. As a result, our courts are constantly confronting factual scenarios that could not be contemplated ten years ago. In the latest example, the Third Circuit recently affirmed the enforceability of a non-compete agreement posted online. ADP, LLC v. Jordan Lynch, No. 16-3617 (3d Cir. Feb. 7, 2017).

ADP sought to enforce a non-compete agreement against two employees who had left to work for a direct competitor. The non-compete was for one year and prohibited the employees from soliciting current and prospective clients. The District Court enforced the non-solicitation clause but declined to enjoin the employees from working for the competitor. The employees appealed the injunction order claiming that the District Court erred because there was nothing to prove that they agreed to the contents of the non-compete, despite their affirmance that they read it.

The Third Circuit rejected this argument. In reaching that conclusion, the Third Circuit noted that the employees acknowledged, by checking a box online, that they “read” the documents, including the non-compete. The Court further stated that those documents “explicitly advised them that the non-competes were a condition of accepting the stock award.” Finally, the employees admitted that they then clicked the “Accept Grant” button and received the stock award. Based on those facts, the Court affirmed the District Court’s conclusion that the employees were “likely bound by the terms of the non-competes.”

The “documentation” of the employee/employer relationship is becoming increasingly paperless. Although the “documentation” may have changed, courts continue to focus on the fundamental concept that if you sign, or in this case check, an agreement, you are typically bound by its terms.

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