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Is Continued Employment deemed Sufficient Consideration for a Non-Compete?

Updated on August 25th, 2022

Continued employment is treated as sufficient employment for a non-compete in 31 of 50 states. Consideration is required in a non-compete covenant and most states recognize the promise of continued employment to be adequate consideration.

What if Continued Employment is NOT Sufficient Consideration?

For states like Texas and Massachusetts, a “material change” in employment must occur such as:

  • Increased compensation. A pay raise, added benefits, or direct cash payment.
  • Change of position. A new title within the organization.
  • Added responsibilities. Increased authority or control.

Continued Employment (State Laws)

StateIs Continued Employment treated as Sufficient Consideration?
 AlabamaThere are no recent court rulings to determine if continued employment is deemed as consideration. Alabama has ruled in the past that it is sufficient consideration (Daughtry v. Capital Gas Company (1970)). Although, the court leaned on state statute § 8-1-1 (2015) which was repealed on January 1, 2016.
 AlaskaNo state statute or court rulings have determined if continued employment is adequate consideration.
 ArizonaYes (Mattison v. Johnston (1986))
 ArkansasYes (Ark. Code § 4-75-101 (g))
 CaliforniaNot applicable, as non-competes are not enforceable in California (Cal. Bus. & Prof. Code § 16600)
 ColoradoYes (Lucht’s Concrete Pumping, Inc. v. Horner (2011))
 ConnecticutNo. Continued employment must be accompanied by another consideration, such as enhanced compensation or employment in a different capacity (Van Dyck Printing Co. v. DiNicola (1993))
 DelawareYes (Research Trading Corp. v. Powell (1983))
 FloridaYes (Balasco v. Gulf Auto Holding, Inc. (1998))
 GeorgiaYes, when the employee is an at-will employee (Glisson v. Global (2007))
 HawaiiThe courts decide on a case-by-case basis (Technicolor, Inc. v. Traeger (1976))
 IdahoYes (§ 44-2704)
 IllinoisYes, if the employee worked for the employer for at least two (2) years after signing the agreement (820 ILCS 90/)
 IndianaYes, at-will employment “constitutes valid consideration” (Ackerman v. Kimball Intern., Inc. (1995))
 IowaYes, continued employment “for an indefinite period of time” is sufficient consideration (Iowa Glass Depot, Inc. v. Jindrich (1983))
 KansasYes (Puritan-Bennett Corp. v. Richter (1983))
 KentuckyNo (Charles Creech Inc. v. Brown (2014))
 LouisianaYes (Acadian Cypress & Hardwood Inc. v. Stewart (2013))
 MaineYes (Brignull v. Albert (1995))
 MarylandYes (Simko, Inc. v. Graymar Co. (1983))
 MassachusettsNo, the agreement must be “supported by fair and reasonable consideration independent from the continuation of employment” (Chapter 228)
 MichiganYes, provided the employee is at will and not on contract (Qis, Inc. v. Industrial Quality Control, Inc. (2004))
 MinnesotaYes, “the mere continuation of employment can constitute adequate compensation to uphold non-compete agreements, but the non-compete must be bargained for and provide the employee with real advantages” (C.H. Robinson Worldwide v. FLS Transp (2009))
 MississippiYes (Raines v. Bottrell Ins (2008))
 MissouriNo, “there must be another source of consideration” (Durrell v. Tech Elecs., Inc. (2016))
 MontanaNo (Access Organics, Inc. v. Hernandez (2008))
 NebraskaYes, there is sufficient consideration if there is “some benefit to one of the parties or a detriment to the other” (Aon Consulting v. Midlands Fin (2008))
 NevadaYes (Southwest Gas Corp. v. Ahmad (1983))
 New HampshireYes (Smith v. Foster (1979))
 New JerseyYes (Hogan v. Bergen Brunswig Corp. (1977))
 New MexicoCourts decide on a case-by-case basis (Charles T. Creech Inc. v. Brown (2012))
 New YorkYes
 North CarolinaNo, “keeping one’s existing job is insufficient consideration for the signing of a covenant not to compete” (Paper Co. v. McAllister (1960))
 North DakotaNo
 OhioYes (Lake Land Employment Group of Akron, LLC v. Columber (2004))
 OklahomaNo, Oklahoma law does not encourage non-competes (Okla. Stat. tit. 15 § 217)
 OregonYes, provided the employee receives “bona fide advancement,” which can mean increased responsibilities, a change in job title, or a change in pay (ORS 653.295(1)(B))
 PennsylvaniaNo (George W. Kistler, Inc. v. O’Brien (1975))
 Rhode IslandYes (Nestle Food Co. v. Miller (1993))
 South CarolinaNo (Poole v. Incentives Unlimited, Inc. (2001))
 South DakotaYes, though unnecessary (S.D. Codified Laws § 53-9-11, S.D. Codified Laws § 53-8-7)
 TennesseeYes (Central Adjustment Bureau, Inc. v. Ingram (1984))
 TexasNo, at-will employment is not sufficient consideration (Hunn v. Dan Wilson Homes, Inc. (2015))
 UtahYes (System Concepts, Inc. v. Dixon (1983))
 VermontYes, employment is sufficient consideration (Summits 7, Inc. v. Kelly (2005))
 VirginiaVirginia courts decide on a case-by-case basis (Mona Electric Group, Inc. v. Truland Service Corp. (2002), Alan J. Zuccari, Inc. v. Adams (1997))
 WashingtonNo, covenants must be supported by additional consideration (HB 1450)
Washington D.C.Washington D.C. banned non-competes with the D.C. Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Law 223-209)
West VirginiaNo, additional consideration is required (Environmental Products Co. v. Duncan (1981))
 WisconsinYes (Runzheimer Int’l, Ltd. v. Friedlen (2015))
 WyomingNo (Brown v. Best Home Health & Hospice, LLC (2021))