Restrictions On Ex-Employees: Non-Acceptance Clauses Vs. Non-Competition Clauses

Introduction

In People Corporation v. Quinn Advisory Group, 2024 ABKB 375, the Alberta Court of King's Bench tackled a contentious issue in employment and business law: the enforceability of restrictive covenants, particularly non-acceptance clauses. A key point of contention was whether a non-acceptance clause needed geographic limitations to be enforceable. The court ultimately concluded that, despite the employer's arguments, the clause functioned as a non-competition clause and was invalid for lack of a geographic restriction.

Background

People Corporation acquired Lane Quinn Benefit Consultants Ltd. (LQBC) in 2018, relying on restrictive covenants in the Executive Employment Agreement (EEA) with the principal, Jay Quinn. Among these covenants was a "non-acceptance clause," which barred Quinn from providing services to, accepting business from, or catering to the company's clients and prospective clients after his departure.