Non-Compete Agreements: The Worst Mistakes an Employee Can Make When Leaving a Job

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I recently represented an employee who was signatory to a non-compete agreement and nonetheless left to go to work for a direct competitor in fairly plain violation of the explicit terms of his non-compete agreement.   While ultimately a good resolution was able to be worked out for this employee, after an extensive amount of litigation, and after the employee unfortunately incurred significant legal fees, I was prompted to write the following article given the number of fundamental, and nearly fatal, mistakes this employee had made before leaving his job to join a competitor. So, based on that experience, I’ve compiled a list (see below) of the most important things an employee who has signed a non-compete agreement should and should not do before leaving a job to accept employment with a new employer who might be deemed a competitor of his former employer:

 

Do’s and Don’ts of Leaving Your Current Employer Where You’ve Signed a Non-Compete Agreement:

  1. Before even making the decision to seek new employment, consult with an attorney and have him or her review your non-compete agreement in order to determine its precise limitations. The language of a non-compete agreement is critical, and, at times, a poorly drafted non-compete can provide you with loophole through which you can escape.   Moreover, an attorney can assist you in devising an exit strategy that maximizes your chances of moving on without getting dragged into litigation by your former employer. I’ve been contacted too often only after-the-fact, and after mistakes have been made, by far too many employees who, without consulting with an attorney, have joined new employers only to receive either a letter threatening litigation, or a lawsuit itself, demanding immediate surrender of the new employment. By that point, devising a successful plan of action becomes much more difficult, if not impossible.
  2. In the months leading up to the date you plan on leaving employment, do NOT copy or take any confidential or proprietary company documents such as customer lists, pricing information, sales strategy, etc. If your case winds up in court, and there is any evidence that you’ve done any of this, the judge will automatically suspect that you are “up to no good” and inevitably rule against you.
  3.  In the months leading up to the date you plan on leaving employment, do NOT email, download, or copy any documents, notes, customer lists, and, for that matter, anything, from the company’s computers to your home computer. The first thing your former employer will do is hire a forensic computer expert to examine your company computer, and, no matter how “smart” you think you’ve been, they will learn exactly what you’ve done.
  4. Likewise, during the months prior to your planned exit, do NOT contact any of your clients or customers to let them know of your plans to leave. If you do so, your employer will use such evidence to attempt to convince the court that you were planning to steal its business, even if your intentions were completely innocent. Once you’ve left, there may be ways to contact former clients or customers that don’t run afoul of your non-compete agreement.
  5. Think about the possibility of negotiating with your employer the terms of your departure, including any modifications to the non-compete, before you leave.  While there may be good reasons why you don’t want to reveal your intention to leave to your employer, if you’ve made up your mind that you are going to do so, it may make sense to try to negotiate with your employer before you jump ship.
  6. Give your employer as much advance notice of possible of your intended last day of work. Leaving with little notice may just be the “last straw” that provokes your employer to go after you to enforce the terms of the non-compete agreement.

Do’s and Don’ts of Joining Your New Employer In Light of Your Existing Non-Compete Agreement:

  1. It is critical that you provide your prospective new employer with a copy of your non-compete agreement so that they can review it and make sure that they are comfortable offering you a position in light of the non-compete agreement. If you are not completely open with your new employer about the existence and terms of your non-compete agreement, it will not serve you well when they find out about it via a nasty letter or lawsuit from your prior employer demanding that your new employer immediately fire you or face getting dragged into litigation.
  2. Before accepting the job with a new employer, try to obtain their agreement that they will stand by you in the event that your former employer attempts to enforce the non-compete agreement against you. You want to try to get your new employer’s agreement that, in the event the threatening letter or lawsuit is forthcoming, your new employer will not terminate your employment but will instead assist you in defending against the matter, including, if possible, paying your legal fees in the event you are sued.
  3. Keep in mind that, typically, if your former employer decides it wants to enforce your non-compete agreement, it will sue not just you but also your new employer. So, there is no way to keep your new employer out of the fray, and therefore you want to enlist it as your ally before the fight begins.