Dealing with a Non-Compete When Hiring an Employee

As an employer, you do not want to hire a new employee only to find out shortly after the hire, that the employee had signed a non-compete agreement with his or her previous employer. The employee in that instance may have less value to your company and the hiring may in fact lead to your company being named in a lawsuit along with the employee where the employer seeks to enjoin or restrict that employee working for you or doing certain things as an employee for your company.

Here are some of our recommendations when hiring a new employee who might possibly have signed a non-compete with his or her previous employer:

Ask more than once if the job candidate may have signed a non-compete with his or her previous or even a past employer. The candidate may possibly have forgotten, especially if he or she had worked with a particular company for a very long time. Remind the candidate that non-competes are oftentimes signed at the time of initial hiring, as part of a written employment agreement, as part of a stock option or stock reward plan, or in connection with some previous bonus.

If the candidate recalls signing a non-compete but does not have a signed copy, ask for an unsigned copy if that is available.

Review any signed or even unsigned non-compete for enforceable provisions and involve your counsel in the process.

Fairly Warn the candidate if he or she tells you that no non-compete agreement exists and that any offer could be rescinded in the future should a non-compete agreement surface in the future.

In Writing ask the job candidate to acknowledge that your company has no interest in acquiring confidential or proprietary information for any former employer. You may furthermore want to warn in writing that your company will not necessarily defend or indemnify the candidate from any lawsuit filed by a previous employer for violation of a non-compete agreement.