For purposes of analyzing the impact of the refusal to sign on an existing employment agreement, it is considered an involuntary termination. In Lewis v. MedAssets Net Revenue Sys., LLC, 2012 U.S. Dist. LEXIS 104714 (M.D. Tenn. July 26, 2012), the employee signed a non-compete agreement. Two years later, her employer wanted all "Manager-level positions and above" to be subject to a "single standardized non-compete agreement" and tried to get the employee to sign a new non-compete agreeent. Id. at *3. When the employee refused , she was terminated. Her employer then sued her to recover the $10,000 relocation bonus it paid her by claiming she breached her employment agreement by voluntarily terminating her employment within one year of her start date. Id. at *10. The United States District Court for the Middle District of Tennessee disagreed based on a ruling by the Tennessee Supreme Court:
In Teter v. Republic Parking Sys., Inc., 181 S.W.3d 330, 337-38 (Tenn. 2005), the Tennessee Supreme Court analyzed whether an employee's termination from employment was voluntary under circumstances analogous to those presented in the instant case. There, the employee signed an employment contract with his employer for an indefinite duration. Teter, 181 S.W.3d at 337. Due to a desire to restructure the division in which the employee worked, his employer later presented him with a new proposed employment contract. Id. While the parties attempted to renegotiate the employee's contract, his initial employment contract remained in effect. Id. According to his employer, if the employee did not sign the new contract, he would be terminated. Id. at 338. Nevertheless, the employee did not agree to the new contract. Id.
Based on these undisputed facts, the Tennessee Supreme Court concluded that the employer terminated the employee. In reaching this conclusion, it cited the following principles concerning the modification of contracts:
Modification of an existing contract cannot be accomplished by the unilateral action of one of the parties. There must be the same mutuality of assent and meeting of minds as required to make a contract. New negotiations cannot affect a completed contract unless they result in a new agreement.
Teter, 181 S.W.3d at 338. The court therefore concluded that, because the employee did not agree to modify his preexisting employment contract and his employer would not continue to employ him under that contract, the employee did not voluntarily resign his position, but was rather terminated by his employer. Id.
The undisputed facts here compel a similar conclusion....[B]ecause the plaintiff did not agree to modify the June 29, 2009 non-compete agreement and MedAssets would not continue to employ her under that contract, the court finds that the plaintiff did not voluntarily resign her position, but was rather terminated by MedAssets.
Id. at *28-31. As such, the former employee was not required to repay the $10,000 bonus.
Based on this ruling, employees and employers who are party to a non-compete "of an indefinite duration" should review the employment agreement beforehand to determine what rights and remedies may be lost if the employee is fired for not signing the new non-compete agreement. Id. at *11.