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How to Hire from the Competition

 

You’ve found the perfect candidate, and they can start immediately! There’s just one hurdle – a post-employment prohibitive agreement (think non-compete and employee/ customer non-solicitation agreements) from the competition. A quick read-through of the document gives you pause and raises questions about whether hiring this person would violate the terms.

Location, Location, Location

Depending on your location, the decision to hire a candidate with a non-compete agreement may mean you have to take a few well-planned risks. Some states are much more strict than others when it comes to contract interpretation.

Legal Risk Assessment

When considering the agreement, evaluation of the “actual” legal risk is essential: what is the likelihood and probability of the previous employer initiating legal action? And the odd of their winning the lawsuit.

Legal risk assessment should include an in-depth analysis of the scope and enforceability of the restrictions detailed in the agreement. Whether legal action would be brought in state or federal court, and what the corresponding state and federal penalties could be.

Don’t forget to check into the previous employers own dispute history for insight into the potential for litigation.

Consider the Impact of Hiring From the Competition on Your Business

Having a clearly defined scope of the prospective job is essential when considering the impact of the non-compete agreement on your business. Your candidate may be limited in certain areas but unrestricted in others. Typically, many of the restrictive elements of the accord will expire within a few months, and it may be worthwhile to modify the prospective job to accommodate the temporary restrictions. Perhaps they can temporarily work outside a prohibited geographic area, or be otherwise employed in a capacity that is not in violation of the contract.

Cautious Next Steps

After you’ve reviewed and analyzed the potential legal risk, you can begin to proceed, with caution. Your officer letter to the prospective employee is an ideal opportunity to provide a written outline of what is expected. For example, you may choose to have your new employee work in a temporary territory for the first months of employment. It is also worth considering what, if any, “out” you have if the situation deteriorates (think a dishonest employee or litigation that is going badly).

Proactive and Protective

Typically, companies get into trouble long before the hiring phase. More often than not, trouble will be found during the recruitment period. A candidate may, to prove their successes, provide confidential customer lists or other protected trade secrets. Outline in writing, the ground rules of your recruiting, for all potential candidates. Making them aware that you will not condone actions that would violate the non-compete agreement serves to protect both your company and the potential employee.

Hiring from the competition will always carry with it inherent risks, and a suspicious former employer may challenge your new hire despite your best efforts. But you can reduce those risks by treading carefully.

If you’re considering hiring from the competition, let the professionals at Top Notch, a leading provider of temp services in Wichita, KS, work with you to help protect your company.

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