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Hiring From the Competition

As an employer, it can be tempting to recruit employees from competitors who have a proven track record of success. These individuals understand the industry and are likely to be tremendous assets to your company. But when there are post-employment restrictive covenants in place, this process can become quite treacherous, and your company can take on unwanted legal risk.

According to Linda Jackson of Littler Mendelson PC, “There has been an uptick in litigation, and I think courts are also more receptive to enforcing noncompete agreements, which means an employer has to be a whole lot more careful.” Here are some tips for keeping yourself out of harms way when hiring from the competition.

Check For Restrictive Covenants

If you’re thinking of going this route for recruitment, you’ll want to ensure that you’re highly informed right out of the gate. This starts with checking to see if there are any restrictive covenants in play that could potentially be an issue. See if the employee has signed any documents like noncompete, confidentiality or non solicitation agreements. If so, determine how this may impact your business if you brought them on board.

Examine Potential Legal Repercussions

Pleading ignorance in court is going to be futile, and what you don’t know can hurt you. If there are restrictive covenants in place, it’s important that you understand what the specific legal risks are. This will force you to find answers to the following two questions:

  • Does the former employer have a track record of lawsuits?
  • What are the likely consequences if they sued your company?

Decide if Hiring From the Competition is Worth the Risk

If you know for a fact that your company is going to be put in a risky situation by hiring an employee, it may simply not be worth it. However, if the risk level is only marginal, then it may very well be worth it, especially if you feel that an employee would be a major asset.

Cover Yourself

If you choose to take a gamble and go ahead and make the hire, you’ll want do everything within your power to cover your business in a worst case scenario. For example, you might need to modify the position temporarily to ensure that it’s not in conflict with a restrictive covenant. The Society for Human Resource Management also recommends that you “obtain written confirmation that the potential hire is not under any disclosed restrictions.”

In our litigation happy society, it’s never been more important to protect your company in any way you can. If you find yourself in the position where hiring from the competition seems like the right move, you should be smart about it and make sure that you know what you’re getting yourself into.

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