One key element for an enforceable non-compete in South Carolina is the existence of “valuable consideration.” While consideration is just one required element among several–including reasonable geographic scope, reasonable temporal/time limits of the non-compete, not unduly harsh in curtailing or limiting an employee’s ability to make a live, etc.–the question of whether an employee received consideration from the company when signing the agreement–can become a make or break issue for the court to decide. A recent federal court decision out of Charleston highlights this issue. [Read More: The Contents of Non-Compete Agreements for South Carolina Employees]
Safelite Sued an Employee for Violation of Non-Compete, Non-Solicit, and Non-Disclosure Obligations
In Safelite Group v. Kimberly Hall, Ms. Hall (the employee) worked for GlassPro, which was purchased by Safelite (a windshield repair/replacement company) on January 4, 2019. She began working for Safelite as its employee on January 4. One week later, Safelite came to Ms. Hall and demanded that she sign a new non-compete/confidentiality agreement. The company, Ms. Hall alleges, did not provide her with any new consideration in exchange for her consideration, other than continued at-will employment. In other words, she got to keep working at the job she was already working at.
In May 2023, Ms. Hall left Safelite and began working for Driven Brands, a competitor to Safelite. After Ms. Hall’s resignation, Safelite went back through her company emails and found that she had sent a number of emails and documents to her husband’s personal email account in the last few weeks of her employment with Safelite. Safelite sued Ms. Hall for breach of the non-compete, non-solicitation, and non-disclosure of confidential information provisions, alleging that she had signed an enforceable non-compete agreement. After the discovery process, Safelite asked the court to grant summary judgment as to the confidential information question only. (Summary judgment is when a court determines that there are no factual disputes that a jury needs to decide and therefore the court rules on a claim before trial.)
What State’s Non-Compete Laws Applied in South Carolina?
In this case, the Non-Compete Agreement contained a provision that stated Ohio law applies to the agreement, even though Ms. Hall lived and worked in South Carolina. Every state views non-compete agreements a little differently, so which state’s laws apply to a particular contract is important. For example, Ohio law says that an employee’s continued at will employment is sufficient consideration to support a non-compete agreement. That means that in Ms. Hall’s situation, where she was allowed to keep working in exchange for signing the agreement, would satisfy Ohio law for an enforceable non-compete on the consideration element. However, in South Carolina, the law is different.
The South Carolina Supreme Court held in Poole v. Incentives Unlimited (2001) that continued at-will employment is NOT sufficient to establish the presence of valuable consideration. A company must pay or provide something else of value to the employee. So if the employee is already working (what the court calls “after the inception of employment”) for a company, then the employee must be paid something else in South Carolina. This directly contradicts Ohio law. And South Carolina courts will not apply another state’s laws if they contradict South Carolina public policy.
Ms. Hall argues that she worked for an entire week before she signed the agreement and did not receive any additional consideration when she signed the agreement one week after the inception of employment. She also argued that Ohio law violated South Carolina public policy, and that therefore South Carolina law would apply.
At the summary judgment stage, the trial judge in Charleston agreed with Ms. Hall that South Carolina law must apply to her situation. Under that standard, the court declined to grant summary judgment, holding instead that whether she signed the agreement after the inception of employment (i.e., one week later) was a question of fact for the jury to determine. In September 2024, the judge denied Safelite’s motion for summary judgment and set the case for trial in February 2025.
Takeaways for South Carolina Employees
If the jury determines that the Agreement is not supported by valuable consideration, then all of Safelite’s claims will fail. However, if the jury finds that there was consideration, then the jury will look at the underlying allegations against Ms. Hall, including violations of the non-compete, non-solicit, and non-disclosure.
Her case provides some good examples for how these types of issues crop up for South Carolina employees. First, sending company documents or emails from your company account to a personal email account can always be tracked. Even if you aren’t sending any confidential information, oftentimes the employer won’t care. It will just file the lawsuit. For any employee planning to leave, make sure that you do not send yourself any company documents or information, nor download any documents to a thumb drive, hard drive, or cloud drive. All of those actions can be tracked by the company. Even if your intentions are innocent, don’t give the company any ammunition to argue otherwise. This type of behavior is a frequent issue in these types of cases.
Second, be mindful when you sign an agreement of how that can impact your livelihood once you leave that employer. Non-competes, non-solicits, and non-disclosure agreements last from one to two years after you leave, and they provide a ready way for employers to hassle you after you leave. I always recommend that you have an employment lawyer review your agreement before you sign it to see if you’re facing an enforceable non-compete or not. Sometimes, as I’ve written about previously, the non-compete agreements are complete garbage. But that doesn’t mean a company can’t bring a lawsuit against you anyway.
If you have questions about a restrictive covenant (non-compete, non-solicit, non-disclosure) that you are about to sign or have already signed, then feel free to give our office a call at (864) 233-4351 (or on our Contact Us page) to discuss the agreement and your legal options. [Read More: A Non-Compete Consultation for South Carolina Employees] It’s always better to be prepared about how to leave a company properly while trying to lessen the chances of being sued, instead of playing damage control later.
