Hiring away a competitor’s valued employee can be quite a coup, but also can bring a host of headaches for unwary employers. This is especially true if the new hire signed any sort of restrictive covenant agreement with his or her former employer.
In a new XpertHR podcast, Texas employment attorney Mary Goodrich Nix discusses the risks that can arise from noncompetition agreements, confidentiality agreements and others, while also detailing steps the hiring employer can take to stay out of court.
First, she advises asking potential employees for new positions, especially if it is a key position, to provide any agreements they have signed with a former employer or third party that may impact their job duties with your company. “Don’t rely on an employee’s written representations, which often can be faulty,” says Nix. In doing so, she notes, an employer is relying on the employee’s interpretation.
Nix also points out that the existence of a noncompete agreement does not necessarily mean it is binding because many are overly broad in terms of the scope of activities restrained. She explains, “The company drafting the agreement needs to remember that a noncompete will only be enforced to the extent it is protecting interests which are reasonably protectable.” If the agreement unfairly limits the employee, Nix says a court may rewrite the noncompete or throw it out altogether.
Another area we addressed involved the possibility of a trade secrets lawsuit against the company that hires away a rival’s key performer. “Many employers know that a new employee has key information from a competitor and then hires that employee hoping in part that the employee will use that information to his new employer’s benefit,” says Nix. “The company’s owners really cannot stick their head in the sand and pretend that they do not know that this is, or could be, happening.”
For more insights on trade secrets, restrictive covenants and related risks when hiring new talent, don’t miss our latest podcast with Mary Goodrich Nix of Munsch, Hardt, Kopf & Harr.