It is difficult to find a qualified executive to fit your company. A star candidate must be able to handle the work and also meet the company’s culture. After finding a great employee, the last thing a company wants to deal with is a restrictive covenant, like non-compete or non-solicit agreement. Most likely, the candidate will have an agreement with a former employer limiting her ability to work for your company, and limiting access to certain clients.
While courts and judges are wary of enforcing non-compete and non-solicit clauses, there are a lot of risks that come with hiring an executive with a restrictive covenant. If the former employer attempts to enforce the clause, then the new employee might not be able to work for your company until the issue is over. Or the executive might decide that the cost of fighting the lawsuit is too high and look for a different job opportunity.
Hiring the employee could expose your company to potential liability. While there are good defenses, a former employer could argue that there was interference or inducement in allowing the new hire to breach the non-compete.
Given these risk factors, being proactive is helpful. There are several steps an employer can take to minimize its risk of litigation.
- Work with an experienced employment attorney to determine how likely it is that a judge enforces the agreement. These agreements are typically very broad, and much of the language may be unenforceable.
- Determine whether a lawsuit is likely. How often does the previous employer file lawsuits to enforce non-compete or non-solicit agreements? Will the executive do the same work or try to get the same clients she previously worked with? Will the executive inevitably use trade secrets or confidential information she received from her previous employer?
- If possible, avoid having the employee do work that could violate any agreement. This could include shifting the executive’s job duties, or having the executive start her job once the non-compete period ends.
- Have policies in place that prevent an employee from using another company’s confidential information or trade secrets. Avoid soliciting the former company’s confidential information.
- Consider having the executive get a waiver of any restrictions from her former company.