When you are courting that new employee, frequently you will present him or her with a rather lengthy employee agreement that contains all the bells and whistles.  Obviously this includes the standard pay/benefit information and maybe some post-employment covenants like a non-compete or non-solicit.  

Often times within the recitals there will also be

Employers  should be asking potential employees and even independent contractors whether they previously signed a non-compete/non-solicit agreement.  Of course, some employees may have forgotten or are unaware they signed one – if possible ask to see their previous employment agreements to screen for any restrictive covenants.
What should a potential employer be looking for: 
  • a non-compete agreement;
  • a non-solicitation agreement;
  • a non-disclosure agreement; and
  • an anti-raid provision.
The first is self explanatory.  A non-solicit could have the effect of a non-compete by keeping a new hire from contacting previous customers/clients.   A non-disclosure could have a non-compete effect depending on the circumstances (i.e. a non-disclosure that prevents an employee from disclosing previous client/customer information).  The anti-raid prevents an employee from attempting to hire folks from their previous place of employment.
Why should the employer be worried?  When a company sues over a non-compete they almost always sue the former employee and their new employer.  By doing so a plaintiff can shut down the employee and also the employer who may or may not be benefiting from the former employee’s non-compete breach.
Employers should be pro-active in the hiring process in determining whether a non-compete is in place.  If one is in play, the employer needs to assess its risk, hopefully with the help of a lawyer.

Continue Reading Employers – Ask potential candidates if they signed a non-compete!