If you're an employee with a non-compete in your employment agreement, and you're considering leaving your job and working for a competitor, you may be thinking, “What's the worst that can happen?” It's a great question, and it's exactly what I'm going to talk about today.
If you're an employee with a non-compete in your employment agreement, and you're considering leaving your job and working for a competitor, you may be thinking, “What's See more +
If you're an employee with a non-compete in your employment agreement, and you're considering leaving your job and working for a competitor, you may be thinking, “What's the worst that can happen?” It's a great question, and it's exactly what I'm going to talk about today.
If you're an employee with a non-compete in your employment agreement, and you're considering leaving your job and working for a competitor, you may be thinking, “What's the worst that can happen?” It's a great question, and it's exactly what I'm going to talk about today.
Today I want to talk about the mechanics of how an employee enforces a non-compete agreement against an employee. My goal here in presenting the worst-case scenario is not to frighten you but give you a sense of your outside liability so that you can adjust your conduct and make good decisions both at the beginning of employment when you're presented with a non-compete and also during that transition process when you're leaving your employer and considering going to work for a new employer.
Let me start by saying that most most non-compete disputes are ultimately resolved through some form of negotiation—your new employer negotiates with your old employer to limit the scope of your non-compete, to keep you from working for certain customers, to keep you working in one division of the new employer rather than others. Sometimes the new employer will open their wallet to resolve the claim, but again that's a discussion for another day. What we want to talk about today is what happens if there is no negotiation, there's no resolution, and they're going to litigate to the mattresses.
The fact pattern here is pretty typical: You are an executive for a company, you have an employment agreement, in that employment agreement contains the typical non-compete language that says you will not work for any competitor of the company for a period of a year, 18 months, or 6 months, whatever it is. You leave your employer, you go work for a new employer that is competitive with the former employer, and the old employer finds out about it. The first thing that typically happens is that you will receive a letter from your old employer that says, “Dear John Smith, we believe you're violating your non-compete. Stop immediately.” The old employer is also usually going to send the new employer a similar letter: “Dear New Employer, we hear you hired Sally Smith. Here's a copy of non-compete, she's violating it. Please terminate her immediately.”
This letter can be very uncomfortable for you if you didn't disclose to your new employer the existence of your non-compete. If you haven't disclosed to the new employer the existence of your non-compete, it's not uncommon that your new employer may terminate you on that basis. It's perceived as dishonesty, and your new employer simply won’t want to deal with that type of thing. So, the next thing that's going to happen is your former employer is going to sue you, and they're going to sue you for breach in your non-compete. They may also assert claims that you've stolen trade secrets in some way or there's also some unfair competition going on. See less -
