Non-Compete help

SubGrapHR

In extending an offer of employment, you find out that the applicant, through his own admission, must have his current non-compete agreement reviewed by an attorney prior to acceptance.  Is it within the prospective employer's rights to request a copy of this agreement to review in efforts to prevent any claims against us?  Note:  He is currently performing work for a competing firm.  Please advise.

TXHRGuy

The prospective employee cannot sign a document that creates obligations for your Company, although he could sign one saying that he is obligated to have your Company sign something before hiring him but that would not create obligatinos for your COmpany unless and until you signed such documents.

Asking to see his non-compete is hardly irrelevent to your decision to offer him a job because you need to know what he can and cannot do for you.  I would ask to see it.  The cats out of the bag now that you know he has one, you may as well know what his constraints are.

HRforME

I would agree with TXHRGuy. Since you know about it, I would ask to see a copy and pass it by legal counsel.  I would also check to what your state/circuit court precedents are in NCA court cases.  I have known companies to not only sue the ex-employee but also their current employer (not that they have won by any means) but if they can bring you into the suit at all, they will try.

What state are you in?  Is the other company in the same state? There was a case a while back (Palmer & Cay v. Marsh MacLennan) where the employee had a NCA in NY.  He then took a job in Georgia and sued MM to get out of the NCA since it wasn't legal under GA law. He won and this case set some precedences.  Actually his company is the name on the lawsuit, not his.  So they won.  But he was also brought in as the President of the company.  I doubt your company will want to fight a lawsuit for this employee.

 

SubGrapHR

Thank you for your input.  I am located in TX and the competing firm is also.  I have requested the NCA and am awaiting feedback.  The prospective employee is having his personal legal counsel review it as well.  I plan to have our counsel review it once received.

HRforME

I am going to try to post a link to a great article I found (dated October 07) at blog.texasnoncompetelaw.com/ 2007/ 10/ articles/ theft-of-trade-secrets/ texas-trade-secret-law-when-your-new-employee-knows-too-much/....just take out the extra spaces.

I will post a link in the next reply, but since it sometimes takes a while for moderators to approve posts with random links, I didn't want you to wait!

HRforME

I tried to post a link, but it is requring approval....so try the following

go to blog(dot)texasnoncompetelaw(dot)com and look for an article in October 2007 titled "Texas Trade Secret Law" under Theft of Trade Secrets.

rr

HRforME

Trying one more time to get info to you that doens't require approval.  Search google for "theft of trade secrets texas" to find a blog that has a great article in October 07 under the section Theft of trade secrets.  It talks about how a hiring employer can protect itself.

TXHRGuy

I think Non Competes are in trouble in the 5th circuit.  They're viewed as anti-competitive.

UgaHR

Thanks for posting this. We are being sued by a now former employee's previous employer due to his/her non-compete.  It has been suggested to me that we should have each new hire sign off saying they either have or do not have a non-compete and if so we get to review it.  I disagree with this because it is the employee who signed the non-compete and not us and it is their legal obligation to know the terms and conditions of said NCA.  Having said that, I will check out the article that another person left on this thread to see what I can do to protect my company from this happening again.

HRforME

Like TXHRGuy stated above, NCAs are going to depend on both state laws/courts and Circuit courts applicable to the employer(s). While the employee did sign the NCA, you need to protect your employer. If that requires asking the new employee and getting them to sign some type of document/release, that is what I would do regardless of whether the employer feels they should be liable or not.