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non compete agreements
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non compete agreements
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We are considering hiring a former employee of a rival company, someone we have known for many years and who has a great reputation in the industry. He claims to not have a non-compete with his former
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non compete agreements
posted at 4/18/2011 10:24 AM EDT
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Posts: 35
First: 6/30/1999 Last: 4/18/2011 |
We are considering hiring a former employee of a rival company, someone we have known for many years and who has a great reputation in the industry. He claims to not have a non-compete with his former company. Of course, we such an agreement, even though we were never a party to it.
How do we verify that (short of asking the former employer, whom we have a sketchy relationship with), and do we have any liability to the former employer should we hire the guy causing him to violate the agreement? What level of due dilligence do we need to perform? |
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non compete agreements
posted at 4/18/2011 10:38 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
With the advice of counsel, you need to develop either an employee agreement which includes such language or a document which affirms that your new employee is not currently encumbered by a non-compete agreement.
You might also want to check your state's laws. Non-competes have varying degrees of enforceability in individual states. But even if it's not very enforceable in your state, I'd tend to go with choice #1 above anyway just to be squeaky clean. |
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non compete agreements
posted at 4/19/2011 5:48 AM EDT
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Posts: 32
First: 1/31/2011 Last: 9/13/2011 |
Hi:
It is somewhat unfortunate that you are aware of this agreement. As a result, if you hire this individual it will legitimately open the door to a claim of tortious interference with contractual relations by the other employer--assuming the agreement arguably applies to your business. In order to avoid such liability exposure, I would seek a waiver from the other employer or indemnification from the prospective employee with respect to this matter. Of course the latter being a much more risky approach. I trust this is helpful. Dave Arnold, Ph.D., J.D. |
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non compete agreements
posted at 4/19/2011 5:52 AM EDT
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Posts: 32
First: 1/31/2011 Last: 9/13/2011 |
Hi: I read the original post wrong--I thought the employee said he did have an agreement. In light of my new reading, I'd have the prospective employee warrant that there is no non-compete in place and he will indemnify your company for any damages, costs, etc. stemming from the breach of such warranty.
I trust this is more helpful. Dave Arnold, Ph.D., J.D. |
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non compete agreements
posted at 4/19/2011 6:15 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Dave
Once you know about the possibility of the non compete I do not see how having the prospective employee sign a waiver or agreement to indemnify takes you off the hook. IMHO the potential employer, with full knowledge of the possibility of a conflict is obligated to take reasonable efforts to check. It would seem that a simple phone call to the former employer's legal department would clear this up. If they are uncooperative I would ask the propsective employee to engage their own legal counsel and have them deal with the former employer. T his would be an issue for any potential employer and if it were me I would want the issue resolved immediately........ |
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non compete agreements
posted at 4/19/2011 6:39 AM EDT
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Posts: 32
First: 1/31/2011 Last: 9/13/2011 |
Hi: My prior post advocates contacting the prior employer (their attorney) and getting a signed waiver indicating that they will not file suit for hiring the prospective employee as the most prudent action. However, indemnification by the employee is a potential, but more risky approach. While it doesn't take the prospective employer off the hook per se, it does cover any liability associated with the matter--assuming the propective employee is willing and able to fulfill the agreement--therein lies the risk.
As for having the prospective employee engage counsel, it's important to remember that such counsel would be representing the prospective employee's best interests---not the prospective employer's. However, if it ultimately leads to the waiver I referenced above, that would be fine. Dave Arnold, Ph.D., J.D. |
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