Legal Question in Employment Law in Georgia

Employment Law During a Company Sale

I work for a media company that is currently for sale. It has come to my attention that when my company distributed the descriptive memorandum to prospective buyers, it made them sign an NDA that said they could not hire anyone from my company for 1 year. While my company is a major one, it operates in a very small industry. Because all the major players in this industry have shown interest in my company, and hence have all signed the NDA, this effectively means that I am not able to pursue employment with any other company in my industry. I do not have a contract with my company nor have I signed any kind of agreement tho this effect. In fact, my company has not disclosed this clause in the NDA to its own employees - we have found out via contacts in the industry. I am an executive with this company, and I may face a potential job elimination as a result of the sale. But yet, I will not be able to pursue employment with anyone because of this. Is this legal? Can the my company force other potential buyers to sign an NDA stating that they cannot hire anyone from my company? They did this without telling us and this almost makes it seem like we are ''property'' of the company. What can I do?


Asked on 5/03/08, 9:10 pm

1 Answer from Attorneys
Scott Riddle Law Office of Scott B. Riddle, LLC

Re: Employment Law During a Company Sale

These agreements are fairly commonplace for such situations. Otherwise, the selling company could never open the books to potential purchasers. It is also common for them to be kept quiet, to prevent such things as employee and customer unrest. So, yes, they are generally legal. It is also unlikely that your company is "forcing" anyone to sign - the other companies can make their own decisions about the transaction. As employees of your company do not have any right to a job at the other companies (or in the industry, for that matter), there is no real claim that they have made the business decision to not hire you in a speculative, hypothetical situation. The restrictions might also expire upon the actual sale.

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Answered on 5/04/08, 10:06 am


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