As an employer, you want to make sure that the time you spend developing and paying employees is not wasted when they leave and go work for your competition. My clients frequently either (a) ask me if their non-compete agreements are enforceable or (b) assume their non-compete agreements are enforceable. Here are four steps you can take to help you enforce non-competition restrictions and protect your business with regard to departing employees:
1. Exit Interview
Exit interviews are important because they provide an opportunity to remind the departing employees of their obligations to your business and also provide you with an opportunity to assess a potential threat. It is usually a good idea to ask the employee why they are leaving and where they are going. Even though they are not obligated to respond, their response, or lack thereof, may be informative.
2. Contact key customer(s)
If a departing employee has had significant contact or a long-term relationship with one of your customers, then it is a good idea to immediately reach out to that customer. You want to maintain that customer relationship, and may even want to begin introducing the customer to a new member of your team. Furthermore, maintaining a good relationship with that customer is important because you will want to know if the former employee does reach out to them.
3. Speak to an Attorney
Before acting in a manner that may be detrimental to a former employee, and before wasting your time, energy, and resources chasing someone down or trying to enforce an agreement that may not be enforceable, it is often a wise first step to speak to an attorney. An attorney with experience in employment law matters may be able to help you assess the enforceability of the agreement in light of the potential offending activity.
4. Act quickly – cease and desist letters
If a former employee is threatening to violate a non-compete, then it is important to act quickly by sending a letter to both the former employee and, if applicable, their new employer. A well-drafted, concise summary of the employee’s contractual restrictions and of the potential harm that your company may suffer, along with a request to “cease and desist” the offending activity, will usually get everyone’s attention.
Joe received his law degree from the University of North Carolina–Chapel Hill School of Law and his Accounting degree from the University of Rhode Island. He is admitted to practice law in Connecticut, Massachusetts, and Rhode Island, and he is a CPA. He is an Adjunct Professor and lecturer at the University level and has been a frequent speaker on business planning and legal matters.