These days, to get great people, you’ve often got to hire away from your competitors, and that brings the issue of “noncompetes” to HR’s front burner. Today’s experts tell you how to manage restrictive agreements.
Aren’t noncompete agreements more a matter for lawyers than HR people? Sure, but when a new hire goes awry because no one read the noncompete, HR’s likely to catch the heat.
Candidates will often say, “No, no, I am not subject to a noncompete,” but you shouldn’t accept that, advise attorneys Michael L. Rosen and Sheila O’Leary of the law firm Foley Hoag, blogging on Mondaq.com. You have to probe further. Here’s a distillation of their suggestions for dealing with candidates who have—or don’t have—noncompetes:
1. Review all documents from past employers that might extend into the future. This seems basic, but it’s often forgotten, the attorneys say. It’s important to ask to see all documents that might contain post-employment restrictions, not just “noncompetes.”
Yes, you do have time to train managers and supervisors with BLR’s 10-Minute HR Trainer. Try it at no cost or risk. Read more
Also review any nondisclosure, confidentiality, invention assignment, nonsolicitation, and stock option agreements, along with bonus and commission plans, and general employment agreements. Any of these could have restrictions that you should know about.
2. Analyze enforceability. When you do come across what seem restrictive agreements, do an analysis to determine whether they are enforceable. They may be so narrowly written that they don’t apply to your situation, or so broadly written as to be unenforceable, the attorneys say.
3. Document existing restrictions. If an applicant is subject to restrictive agreements, note this fact in your hiring documentation and develop clear guidelines about what communications and actions are permissible. If the person says there are no agreements, note that as well. It might come in handy if the person has misrepresented the situation.
4. Be wary even when there is no noncompete. There are still legal principles that restrict employee conduct when changing jobs. In this regard, pay special attention to contacts with customers, especially as the new hire works through any notice period with the former employer.
5. Be careful when hiring several employees from the same company. The stakes are higher when you hire a group of people from the same company, and especially a competitor. They are going to notice and take action to protect their interests. Provide clear instructions for new hires about communications with former co-workers, say Rosen and O’Leary.
Train your line managers with BLR’s 10-Minute HR Trainer. There won’t be time for classroom boredom. Try it at no cost and with no obligation. Read more
6. Avoid unwittingly obtaining competitor information. Make it clear throughout the hiring process that you are hiring the person, not any proprietary information or contacts he or she may possess. Require candidates to confirm in writing that they are not bringing materials—including electronic files—from their former employers.
7. Give candidates rules. It’s best not to just assume that people will behave as you want them to. Give guidelines concerning behavior. For example, ask new hires not to use their current employer’s resources to plan their departure. They shouldn’t be writing proposals for you on the current employer’s time.
No matter how many precautions you take, say Rosen and O’Leary, you still may receive a letter from a former employer’s lawyer, accusing you of violating either a formal noncompete or other business convention. Of course, each situation is different, but Rosen and O’Leary suggest taking the opportunity to educate former employers about the steps you have taken to protect their interests. Perhaps you can avoid litigation.
In the next Advisor, some legal tips for noncompetes from the famous HR Red Book , (Officially called What to Do About Personnel Problems in [Your State]) and an intro to a training system that helps all managers and supervisors deal with hiring issues, firing issues—and everything in between.