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Avoid Liability When Hiring Employees From Competitors

After hiring, the last thing any employer wants is to be sued. Especially if the suit seeks to prevent the hire from working. So how can you avoid liability when hiring employees from competitors? You should be aware of the applicant’s duties before, during, and after an interview. Review these principles to avoid liability when hiring employees from competitors.

Before the Interview

Before the interview, avoid communications that may be construed as competing with their current employer. If you do this, the employer cannot claim breach of fiduciary duties, an employment contract, or accuse you of conspiring. Someone can prepare to leave employment, but should not compete with their current employer. Do not discuss with the current employer’s clients leaving before the employee has resigned. Ensure that the applicant does not copy the current employer’s customer list, secret formula, or financial information.

At the Interview

In the interview, you should ask if there is a restrictive covenant. Additionally, you may want to have them sign a statement. The statement should include that the employee does not have any restrictive covenants, they did not take employer property or confidential information, and that you would face no penalty for hiring them.

Ensure the applicant understands they should treat their current employer with good faith. If there is anything sensitive, consider having a second person sit in on the interview. Ask the second person to file a memorandum stating what was discussed. If sued, the applicant might blame you for everything. Consider having an attorney review the memorandum.

If the applicant shows you a restrictive covenant, you should have an attorney review it to see if it is enforceable, judge its scope and applicability to the new job and the applicant. Document any advice received.

After Hiring

Ensure that your new employee is not using any property or information from the old employer, violating the prior employment agreement, if any, or defaming or disparaging the prior employer.

Trust your Instincts

If you feel suspicious about anything, consult a knowledgeable attorney at any point. You should document the advice received. An ounce of prevention is worth a pound of cure.

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