Hiring and the Law —Hiring Employees With Non-Solicitation and Other Such Agreements

Devora L. Lindeman, Esq., Partner at Greenwald Doherty LLP, is providing us with insight and information regarding the hiring process. Ms. Lindeman is a management-side employment lawyer and has exclusively represented managers and companies in federal and state agencies and courts with regard to their labor and employment needs for many years.

Questions addressed to Ms. Lindeman may be addressed in this column.

Hiring and the Law
By Devora L. Lindeman, Esq.*

Question:  The salesperson I want to hire has a non-solicitation/ non-competition agreement with a prior employer.  Can I hire her?

Answer:  Maybe.  When hiring for any position, it is always prudent to ask the candidate whether he or she has an agreement with a prior employer that covers non-solicitation, non-competition and confidentiality.  Just because the candidate has such an agreement, however, may not automatically mean that you can’t hire that person.  To begin with, the agreement may not even apply to the job the person is being hired for.  Furthermore, depending on the law of your state, the agreement may not be enforceable, even if it appears to apply.  And last, it may apply and be enforceable, but you may still be able to hire the person as long as he or she does not violate the agreement while working for your company.

This is a situation where it is generally a good idea to consult with a management-side employment lawyer before bringing the new hire on board.  Too often, I see clients sued by their new hires’ former employers alleging that the new hire is wrongfully soliciting their clients and/or using the former employer’s confidential information–at the request and/or with the knowledge of their new employer (potentially, you).  Thus, such a lawsuit is brought against both the former employee and that person’s new employer.

These agreements are generally utilized to protect company confidential information (i.e. customer contact information, preferences, pricing, etc.) and the business relationships with customers.  Your prospective salesperson likely has an agreement saying that:

(a) She cannot utilize her former employer’s confidential information. This would likely include a prohibition against utilizing information about when customer contracts expire and what the former employer was charging for goods and/or services to the extent that information was not public knowledge. Other similar, confidential information could be protected.

And/or that

(b) She cannot solicit (contact) the customers she worked with at her prior company to sell them a competing product should she go work for another company.

Other prohibitions and restrictions may also be included.

If your company does not sell products that compete with those the prospective salesperson sold at her prior company, then in all likelihood, her agreement would not even apply.  If the products are competitive, you would first want to determine whether her agreement is enforceable.  There are many legal reasons why the agreement could be faulty so that if her former employer tried to enforce it in court it would not be successful.

That said, you may not want to spend the money to pay lawyers to argue that your salesperson’s agreement with her former employer is unenforceable.  In that case, it would likely be prudent to either (a) see if the salesperson can work for you without violating her agreement by, for example, creating new contacts and not contacting the customers she worked with at her old company and absolutely not referring to any information belonging to her prior employer, or (b) not hire this person because of the potential legal risks to the company.

The important thing, however, is to get a copy of the agreement from your prospective employee so it can be reviewed.  Following that, appropriate decisions can be made.  And, by the way, it is probably a good idea for your company to consider implementing these types of agreements.

*Ms. Lindeman is a Partner at Greenwald Doherty LLP, a law firm that exclusively represents businesses in all aspects of labor and employment law.  These columns are intended to be general information regarding the topic discussed and are not to be considered legal advice regarding a specific situation. Contact a management-side employment attorney familiar with the law of your jurisdiction for specific advice.  Ms. Lindeman is admitted to practice law in NY and NJ and may be contacted at DL@greenwaldllp.com.  She is under no obligation to respond to reader inquiries personally, but may answer general employment law questions through this column.

© 2011 Greenwald Doherty.  May not be reprinted without permission.

As the law varies in each area, please check with an attorney to ensure you are applying these tips within the law.

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