$100 sufficient to support non-compete – N.C. Court of Appeals

Employment Staffing Group v. Little. Most tech practitioners can recite the doctrine that a non-compete is not enforceable without consideration. Usually, the offer of employment is the consideration. Sometimes, an employer wants to add a non-competition covenant after the employment has already begun.

Lawyers vary on what they tell their client is the minimum possible consideration. Some say a few dollars, some say a a few hundred.

The North Carolina Court of Appeals has now given some concrete guidance: $100 will do. What’s more, in this case the $100 payment was not even addressed in the agreement. Nonetheless, the court concluded that consideration was not illusory.

Here, since the Employment Agreement is silent as to consideration, an element necessary to form a binding non-compete agreement is absent—but that element is not precluded by any provision in the written agreement. Furthermore, both parties admitted that Plaintiff offered Defendant $100 to sign the non-compete covenant, and it is undisputed that Plaintiff actually paid Defendant $100. Consequently, as in Hall and Beal, the written non-compete covenant is not fully integrated, and the merger clause and parol evidence rule do not prohibit the trial court from considering the evidence showing the missing essential term of consideration—that Plaintiff paid Defendant $100 for signing the Employment Agreement. This Court has reached a similar conclusion in a case in which there was no signature on the signature line of the written non-compete agreement. See New Hanover Rent-A-Car, Inc. v. Martinez, 136 N.C. App. 642, 646-47, 525 S.E.2d 487, 490-91 (2000) (considering parol evidence to determine whether an employee had signed a non-compete agreement and assented to its terms). In this case, we hold that Defendant’s argument that the consideration was illusory because it was not provided for in the Employment Agreement is without merit.