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Be wary of limiting workers’ job prospects

by on
in Hiring,Human Resources

Because a temporary staffing agency wanted to protect its investment in recruiting and hiring temps, it made its temps sign restrictive covenants preventing them from accepting jobs at client companies for at least 90 days after leaving the agency.

When the temp agency lost its contract with a client company, one of its temp-agency competitors moved in and hired the temps.

The temp agency sued, but a state court refused to uphold the restrictive covenants that barred the temps from jumping ship within 90 days. The court's reasoning: While it's OK to put restrictions on workers to protect your company's trade secrets and business contacts, it's not legit for you to place such restrictions on workers to protect your cost of recruiting and hiring employees. (National Employment Service Corp. v. Olsten Staffing Service Inc., No. 98-701, N.H., 2000)

Advice: With increased worker mobility, there is renewed interest in binding employees to noncompetition and confidentiality agreements. To make such contracts effective, the courts say you must tailor the restrictions narrowly.

States have different laws on noncompetition agreements, and some are downright hostile to the employer. But you can increase the likelihood that your agreement will be deemed reasonable by limiting its time and geographic scope, and by offering the employee something in return for signing it. In some states, the job itself is enough reward for signing the agreement.

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