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Three Ways an Applicant's Non-Compete Agreement Can Stop You Cold

Guest post by: Marijo McCarthy

Article Overview: There is some good news as we enter the first year of a new decade: some employers are cautiously beginning to add new employees as business begins a torturously slow climb back. But there is some not-so-good news as well: Many smart, qualified, potential employees are still subject to non-compete agreements with former employers.

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Three Ways an Applicant's Non-Compete Agreement Can Stop You Cold

There is some good news as we enter the first year of a new decade: some employers are cautiously beginning to add new employees as business begins a torturously slow climb back.


But there is some not-so-good news as well: Many smart, qualified, potential employees are still subject to non-compete agreements with former employers.


This doesn't mean you can't hire that superstar sales person you've had your eye on. It simply means that you need to sharpen your interviewing skills and dig deep enough to uncover any restrictions to the hire. Restrictions, interestingly enough, that won't necessarily show up on a resume or in a reference.


Two years ago, I undertook a "point, counter-point" dialogue based upon a column written by Scott Kirsner, a high tech writer for The Boston Globe, on the issue of non-compete agreements. My intention was simply to point out that there are two sides to every story and that Scott had advocated for only one.


Given the comments I received at the time — on both sides — I followed up the next month with pointers for small business employers on who should be asked to sign a non-compete and why.


And here we are, two years later, re-visiting a topic that isn't going quietly into the night!


If you are an employer fortunate enough to be in hiring mode, here is an interview question you should ask your final applicants: "Are there any restrictions with your former employer which would prevent me from hiring you? For instance, when you left your former employer, was there an existing non- compete agreement in place or did your severance arrangement include signing one as a condition to receiving a severance package?"


If the answer is "yes," don't give up… simply dig further.


Here, for example, are some possible restrictions on your potential new hire and my suggestions for addressing each situation:


  • Your company and the former employer of your applicant might be competitors in your industry. If so, and the applicant has a non-compete agreement in place, your applicant may be restricted from working for you for the period of the non-compete and, vice versa… you might be restricted from hiring that applicant.
Unless there is a very short period of time left on the non-compete restriction, this is probably the end of the line with this applicant.


  • Your company might be a customer of your applicant's former employer. If so, depending upon whether there is a "non solicit" restriction in the agreement and what that "non-solicit" restriction prohibits, your applicant may be restricted from working for you for the period of the non-solicit. And again, you might be restricted from hiring that applicant.
It's possible as well that the applicant may simply be restricted from soliciting customers of his/her former employer. In this case, you may be able to hire provided you restrict the applicant's activities regarding these customers. This requires more digging.


  • Your company might be talking with your applicant's former employer right now about doing business. If so, depending upon the restrictions in the applicant's agreement, your applicant may be restricted from working for you for the period of the non-compete. And, you guessed it, you might be restricted from hiring that applicant.
In this case, it may be an opportunity for you to tailor and define the applicant's activities, with the consent of his or her former employer [depending upon how eager the former employer is to sign you up as a customer!].


The point here is that while you should never (ever) ignore these agreements when hiring, you don't necessarily need to come to a screeching halt with the applicant. The situation calls for more investigation, just as you would if any response during the interview process were to raise a red flag.


A review of the non-compete agreement [in concert with your company's attorney], some patience [if the non-compete period were about to expire, the situation may work itself out], and maybe even some probing with the former employer [there may be exceptions in some of these non-compete agreements worth exploring], are all in order.


As with most business situations, sometimes it is just a matter of careful investigation, persistence and patience, or a combination of all three, to reach a satisfactory result.

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Home > Legal > Marijo McCarthy > Three Ways an Applicants NonCompete Agreement Can Stop You Cold >
Article Tags: applicant, former employer, noncompete agreement, three ways

About the Author: Marijo McCarthy
RSS for Marijo's articles - Visit Marijo's website

Marijo McCarthy is principal of Widett and McCarthy, a Boston-area law firm that helps small business owners grow their businesses with pragmatic legal advice, mentoring and a solid team of professional advisors.

Click here to visit Marijo's website Dashed Line

More from Marijo McCarthy
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Dont Blow the Boilerplate in Contracts
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