Hiring from the competition, how much should we ask about any noncompete agreements?

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in Employment Law,Hiring,Human Resources

Q. We are considering hiring an employee away from one of our competitors. Should we ask whether she is subject to a noncompete agreement, or is it better for us to move forward not knowing the answer?

A. There are different schools of thought, but I subscribe to the notion that it is usually better to know early on whether your hiring decision might run afoul of another employer’s noncompete agreement.

If you hire a competitor’s employee and that person is subject to a noncompetition agreement, your company could become liable for interfering with the competitor’s contractual rights.

Such “tortuous interference” claims are only viable if and when the new employer becomes aware of the competitor’s contractual rights. That is the reason why some believe the “head in the sand” approach is preferable.

However, whatever advantage this provides is short-lived.The previous employer simply needs to send you a copy of their agreement and then you are on the hook.

By the time this occurs, you’ve already hired the individual, invested in training her, exposed her to many of your secrets and taken many other steps that you probably wouldn’t have done if you had known that her employment with you breaches an agreement with her previous employer.

If you look into the agreement early on, you may learn that it is not enforceable, or that there are ways of engaging her services that won’t run afoul of any agreement she has with your competitor.

Keep in mind that even without a noncompete, you need to be careful that this individual does not divulge any of your competitor’s trade secrets.


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