For Departing Employees
Competing With Your Former Employer – Key Considerations for Employees
A decision to resign in order to move to a competitor or start up your own competing business, can be fraught with legal risk. If you are contemplating such a move, consider hiring an experienced employee competition lawyer who can help you navigate these risks and potentially avoid costly, protracted litigation.
Our lawyers at Pulver Crawford Munroe have deep experience advising employees on competition with their former employer and are available for consultations on these matters.
Before You Move to the Competitor
If you have not yet left your current employer, it is prudent to have a lawyer review several matters with you to improve the prospect of a “clean break”. Some of the issues to consider are these:
- What obligations do you have to provide reasonable working notice of your resignation?
- Does your employment agreement contain either a non-solicitation or non-competition clause?
- If “yes”, is it enforceable? If it is enforceable, would your employment with the new employer put you in breach of those obligations?
- Do you have fiduciary obligations to your current employer that would prevent you from soliciting its clients or customers for a reasonable period of time? Some employees, such as high-ranking executives or other key employees may have these obligations.
- What information of your employer is confidential and hence must be left behind? What information can you take with you?
- Would it be lawful for you to coordinate your departure with other employees?
- Do you have any deferred compensation, such as stock options or retention bonuses, that are at risk if you leave?
- Is your new employer prepared to pay your legal fees and any damages if you are sued by your former employer?
After You Leave
Perhaps you did not have an opportunity to consult a lawyer before your departure, but you now have received a letter from a lawyer representing your former company. The letter may allege you engaged in unlawful conduct, such as taking confidential documents, contacing or soliciting clients in breach of your employment agreement or failure to give the required notice of resignation. The lawyers’ letter may threaten an immediate application to court for an injunction to prevent you from engaging in these practices.
If you find yourself in this situation, hiring a lawyer experienced in these areas may help to avoid litigation and minimize disruption to your new employment or business. Your lawyer can provide strategic and legal advice on the following issues:
- Are any documents (electronic or paper) you took with you confidential? If so, how should you best address the situation to avoid litigation?
- Does your employment agreement have a restrictive covenant (a non-compete or non-solicit clause). If so, is it enforceable? If it is enforceable, is there a way to continue in your new employment without breaching the restrictive covenant?
- Were you a fiduciary of the former employer, preventing you from soliciting its clients or customers for a reasonable period of time?
- What can you divulge to your new employer about your former employer’s business without breaching your duty of confidence?
- What can you say to the clients and customers you dealt with at your previous employer about why you left?
- What documents, such as emails, text messages or other communications should be preserved in the event that litigation commences?
- What are the risks of a successful lawsuit against you if your former employer decides to serve a claim on you?
If you find yourself needing advice in any of these areas, contact the lawyers at Pulver Crawford Munroe LLP.