Between finding the right candidates and making attractive offers, employers can face several challenges when it comes to adding to the workforce. It can become even more complicated when a desirable candidate has a non-compete agreement with another company.
As noted in this Washington Post article, studies estimate that roughly 1 in 5 people are bound by a non-compete agreement. With so many people subject to the restrictions of a non-compete agreement, it is crucial for employers to know what they can do if they wish to hire someone that has one in place.
Asking upfront
Before you get too far into the hiring process, employers should pay close attention to a candidate’s work history. If there is a competing company in a person’s background, it is wise to determine whether the person has a non-compete in place. The first step is to ask the candidate and, if the answer is yes, there is a non-compete in place, to receive and review it. You can also ask the former employer if you have concerns but consider this option carefully. You may not want to disclose this information to a competitor.
Determining if the non-compete is valid
Not all non-compete agreements are enforceable. Some are overly restrictive or otherwise problematic, which could increase the likelihood that a court would not enforce, or would likely amend the agreement under the Blue Pencil Doctrine. That said, it could cost considerable time and money to challenge the validity of a non-compete, so employers might consult with an attorney to determine if this is wise.
Adjusting job requirements, description
If there is a candidate you are committed to hiring, consider adjusting the job requirements so that they do not conflict with a person’s non-compete. These adjustments might include relocating the person to another location or hiring him or her in a different capacity.
Proceeding with caution
Hiring someone with a non-compete in place can be a risky decision. The employer could end up in court in some cases and may well be liable if they had prior knowledge of the non-compete and its restrictions. It is also possible that the employee will have to leave a new job, putting an employer back at square one.
These setbacks can be expensive and frustrating, so it is important to consider the specific situation carefully before hiring someone bound by a non-compete agreement. And, as always, contact Madigan, Dahl & Harlan to work through these issues.