A Texas-based company has lost an appeal involving an arbitration award. The man who received the award sold his business to the other company and was then subsequently terminated. An appeals court upheld a lower court’s ruling in the case although the man was denied a motion for filed sanctions. The transaction between the two businesses involved two contracts, an interest purchase agreement and an employment agreement.
The arbitrator in the original wrongful termination case determined that the man who sold his business was terminated without just cause. While it was decided that he deserved compensation, an amount wasn’t set. The arbitrator also found that a non-compete clause in the purchase agreement would remain effective for its full five-year term.
Neither party was pleased with the arbitrator’s findings; the man asserted that the non-compete cause was invalidated when he was terminated. A dollar amount suggested by the business owner was accepted by the arbitrator. This is what led the company to file an appeal to modify the amount of the award. The appeals court ruled that the company failed to provide proof that the initial award was somehow lacking merit. Legally, the arbitrator’s decree remains intact.
Any type of employment contracts, whether or not a company purchase is part of the arrangements or not, often contain specific guidelines for what constitutes grounds for termination. Involving an attorney as part of the process may prevent unfair clauses from being included. A lawyer may also be able to negotiate with the employer to clarify any language in the contract that’s not clear or open to interpretation. It may also be possible to negotiate if non-compete agreements aren’t reasonable. Even when contract terms are agreeable, a lawyer’s input may help ensure that an employee’s rights are upheld.