A competitor’s workforce can often be the best source of new hires for your company — and also the most dangerous. Here are some lessons for HR from the courts on how to recruit those folks without getting sued by your competitors.
In one recent case, the company hired an employee who was working for a competitor. The problem: He was covered by a non-compete agreement. The competitor sued him — and the company — for breaking the agreement.
Was this company liable because the worker chose to change jobs? Not in this case, the judge said.
Here’s why: When the employee came to interview, the Human Resources manager specifically asked him if he was covered by any restrictions on his employment. He lied and said no. Therefore, the company couldn’t have known the law was being broken.
The court ruled a company can only be liable if it “knew or should have known” an agreement was being violated.
Are employers ever liable for broken contracts?
That company knew how to avoid liability by asking about any restrictive agreements. But some employers have had to learn the hard way.
In another case, a company hired two of its competitor’s workers. Just prior to changing jobs, though, both of them were put through a training program and, in exchange, signed a year-long contract. The competitor told the new employer about the contract and sued the company when the hiring continued.
The company’s defense: The employees chose to switch jobs, and it was simply letting them make the decision.
Wrong move, the judge said. By hiring workers it knew were under a restriction, the company was liable for interfering with the contract.
Non-compete keys for HR
What are the lessons for recruiters and HR pros? Here are three keys to attracting a competitor’s talent — without ending up in court:
- Ask the recruit. That’s the best way to shield your company from liability and show you didn’t intentionally hire someone covered by an agreement. If any agreement does exist, get a copy of it to make sure you can still hire the employee.
- Tell the new employee’s manager to look for signs that he or she is using a former employer’s confidential information, like trade secrets or customer lists. Employers can be liable for violating non-solicitation and confidentiality agreements, too.
- If there is a non-compete, you might want to contact the former employer. Many agreements don’t hold up in court, and the company may choose to release the employee from the agreement rather than go through costly litigation to try and enforce it.
Cite: Infinity Products, Inc. v. Quandt and CRST Van Expedited, Inc. v. Werner Enterprises, Inc.