$100 is Sufficient Consideration for a Non-Compete

The North Carolina Court of Appeals recently concluded that $100 is sufficient consideration for the execution of a mid-employment non-compete. Employment Staffing Group v. Little, 777 S.E.2d 309 (N.C. Ct. App. 2015). Monica Little had worked for Employment Staffing Group (ESG) since 2001 when, in 2014, ESG required her to sign an agreement that restricted post-employment competition and solicitation as a condition of her continued employment. The agreement prohibited Little from: (i) engaging in certain competitive activities within a 50-mile radius of ESG’s base locations for a year, and (ii) soliciting certain customers for two years. ESG paid Little $100 in exchange for that agreement.

Little argued that the consideration was inadequate because she was pressured and under duress to sign the agreement. According to the Court, “While it may be true that [Little] felt pressure to sign the non-compete in order to continue her employment, this Court has enforced non-compete agreements under similar circumstances in the absence of fraud.” Accordingly, the Court concluded that the $100 payment was adequate consideration.

While North Carolina law still requires something more than continued at-will employment to support a mid-employment non-compete agreement, it certainly does not require much. While we still do not know how low the consideration floor may go, employers now know that case law supports the adequacy of a $100 payment.

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