The Scenario: Your Company has recently hired a new executive, senior manager, sales representative, or engineer. He has all the requisite education, training and experience. He “aced” the multi-level interview process and the company expects the new employee to really make significant contributions to the company’s success in the future. Shortly after the employee starts, you receive a “cease and desist letter” from the employee’s former employer informing you that your new employee signed a non-compete agreement while employed by his former company, which prevents him from doing all or part of the job that you just hired him to perform.
You bring the “cease and desist letter” to your new employee’s attention and he indicates that he (1) forgot about the non-compete agreement, (2) was required to sign the agreement, and/or (3) did not think it was important to mention because his former employer never enforces these type of agreements. Now what do you do? Your company is aware of the non-compete agreement and wants to avoid being drawn into litigation.
Can the company revise the new employee’s responsibilities so that it does not violate the non-compete agreement? Should the company even try to change the employee’s responsibilities? Or, should the employee be terminated because he was hired for a job that he can no longer perform without putting your company at risk of being drawn into litigation?
To avoid this all too common scenario, Nancy Sasamoto reminds all clients to question prospective employees, particularly executives, senior managers, sales representatives, and engineers about any non-compete agreements that they may have signed with a previous employer. Before offering a position, you should review the terms, conditions and limitations of the agreement. Nancy points out that learning about a non-compete agreement in advance of making an offer saves the Company a significant amount of time later and prevents the Company from having to make the difficult decision to either modify the new employee’s responsibilities so that they do not conflict with the non-compete agreement, or terminate the employee because he or she can not do the job for which they were hired.