Legal Considerations Before Hiring an Employee from a Competitor

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With operations resuming and starting to return to normal after COVID-19, employers are re-assessing and re-structuring their workplace. In some cases, they are hiring talent previously employed by companies within the same industry. It is generally permissible to undertake this action. However, there are some factors for employers to consider, before doing so. These include whether new hires have executed any non-compete, non-disclosure, or non-solicitation agreements with their former employer. Another factor that employers must consider is whether new hires will transport or transfer any sensitive/confidential/trade secret materials from their prior employer.

To help manage the risk surrounding this issue, at MNK Law, we suggest that employers include the following sort of paragraphs in their offer letters to new hires:

“Your written acceptance of this offer represents and warrants to the ABC Corporation that you are under no contractual commitments, inconsistent with your obligations to the ABC Corporation, including, without limitation, any employment or consulting agreement, any agreement not to compete, or any confidentiality or nondisclosure agreement to which you are or may become a party on or at any time after your start date.

Additionally, your written acceptance of this offer represents and warrants to the ABC Corporation that you will not use thumb drives, cloud-based storage, or hard-copy records to remove any information from your previous employer. In addition, that you will complete a thorough review of your possessions, before you begin employment with the ABC Corporation, and return all such materials to your former employer. The review should include your home computer, external hard drives, thumb drives, and cloud-based accounts (such as contacts and documents in iCloud, Dropbox, and other similar services).”

The inclusion of these sorts of paragraphs addresses a few risks when hiring talent from within the same area of business. Firstly, it assures you that new hires are not restricted in any way from performing their new job duties at work. Secondly, it provides new hires a written directive not to retain confidential information from their prior employer. Thirdly, the written notice serves as a crucial reminder to new hires not to accidentally transport or transfer confidential material.

At MNK Law, we pride ourselves on considering our clients’ problems from outside of just a legal lens. In this situation, we would also recommend our clients consider the decision more broadly from a business lens such as whether it aligns with their short- and long-term objectives, goals, and ethical policies within their company along with the etiquette and optics within their industry.

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This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.