Businesses Face Liability if they Poach their Competitors’ Employees

When businesses seek to hire employees from their competitors, one of the first questions most prospective employers ask is whether the candidate has an employment agreement with a non-compete provision with their current employer. The answer to this question will often dictate whether, and how, the prospective employer pursues the candidate.

If the candidate has an employment agreement that includes a non-competition, non-solicitation and/or non-disclosure provision, the prospective employer should review the agreement, and have its attorneys analyze whether the agreement is enforceable under applicable law. The hiring decision, position offered, and job responsibilities assigned should take into account the review and analysis of the prospective employee’s agreement, in order to reduce the potential risk of claims against the new employer by the soon-to-be former employer.

Interestingly, however, in a recent case in U.S. District Court in Oregon, where the new employer was sued for intentional interference with the new employees’ contracts with their former employer, among other claims, the new employer was able to defeat a request for injunctive relief because there was no evidence that the new employer knew about the employees’ non-solicitation and non-disclosure obligations to their former employer. While the case continues, at least at the injunctive relief stage, ignorance was bliss for the new employer.

We do not recommend ignoring the possibility that a prospective employee may have an employment agreement that impacts their ability to work for a new employer. Instead, a thorough analysis of the enforceability of any employment agreement should be undertaken. We suggest employers learn good facts (and bad) at the outset, and then analyze next steps accordingly.

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