You Can’t Make ME! (Oh yes, the church can!) - posted by Becky DaVee
According to the Non-Profit Legal and Tax Letter, August 28, 2006 edition, Mr. Hugh Webster notes that Non-Compete Agreements are enforceable against former employees of a non-profit.
What is a non-compete agreement? For simplification purposes, let’s say that a church hired a minister to perform selected duties for the church. In conjunction with his services and as a condition of employment, the minister was required to sign a non-compete agreement. The agreement provided that for 1 year following termination of his employment with the church, the employee would not perform the same service for a church across the street. Subsequently, the minister resigned his employment and soon violated the agreement by working for the “church across the street,” performing the prohibited services under the agreement. The church files a suit against the minister and won under the state court.
Some employees may not perceive the driving principle behind not-for-profit status. The simple fact that a corporation is organized for benevolent purposes does not indicate that such corporation does not have protectable business interests. Not-for-profit (Churches are classified under this IRS code) corporations are entitled to protect themselves from unfair competition just as for-profit corporations can. The not-for-profit status has no effect on its ability to protect itself from unfair competition by way of non-compete agreements.
We believe that non-compete agreements should be reviewed by an attorney prior to finalization between the parties to the agreement. If in question…ask!
