Hiring from Competitors


5

I am thinking of hiring my staff from my competitor's firm, are there any legal issues in doing so? Both for my firm and for the new joining staff member?

Additional details: To be more specific, I am planing to hire the director of sales with a salary and equity and he will come with some good industry contacts. The employment state is NJ.

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asked Jun 30 '11 at 02:05
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User8226
197 points

3 Answers


2

Depends on if the employee signed an enforceable non-compete contract. Honestly even an unenforceable one might be problematic because even if they can't win they might still sue you into oblivion.

answered Jun 30 '11 at 02:21
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Sean
1,149 points
  • Require your new hires to sign an agreement that they have no other agreements. – Jeff O 9 years ago
  • That won't stop you from being sued by an aggressive pissed off competitor. For the right person it might be worth it, but if you're super small and the person isn't that key it might not be worth the time, mental effort and lawyer fees. – Sean 9 years ago

1

In practice, companies hire people away from their competitors all the time. The legal effects in the US depend a lot on the state.

In California, with some unusual exceptions, section 16600 of the Business and Professions code generally makes non-compete clauses illegal and unenforceable. That doesn't mean a competitor in California couldn't sue you or the employee, just that it would probably be a very quick court case.

Around Silicon Valley, I've seen tons of people jump ship to direct competitors and nobody says boo.

I gather things in Texas (for instance) are quite different, and the law and courts there seem quite happy to support non-compete clauses.

answered Jun 30 '11 at 06:56
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Bob Murphy
2,614 points

0

IANAL, but a) it depends on if the employee has a non-compete signed with the competitor, b) the state and its legal behavior wrt non-competes, and c) the competitor's war coffers versus yours.

Unless there are really crazy benefits to open up that can of worms, I'd stay out.

answered Jun 30 '11 at 05:48
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Alphadogg
1,383 points

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