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them. But the safest thing is to not give the previous cus- tomer much direction at all.” Again, though, employers need to be careful about


over-reach that can void the agreements. Not only should the terms specify a reasonable time limit, but they should also avoid prohibiting the solicitation of all customers served by the current employer.


“There usually needs to be some relationship between the employee and the customers, in terms of previous interactions,” cautions Ahmad. “The exception would be if you could argue, for example, that the employee had confidential information about your margins on certain products and that information can be leveraged at any customer. You can often make that argument work.” There’s another kind of non-solicit. Often called


an “anti-raiding provision,” this one keeps departing employees from luring coworkers to the new employer. “I don’t know of anything that triggers litigation more than a high level employee leaving a company, and then is suspected of being the Pied Piper and causing a bunch of other employees to leave,” says Ahmad. “Many times that gets articulated as some type of raiding claim, even though not every state has protections specifically for that.” Having a well-written non-solicit of employees, he adds, can help protect against this situation.


Confidentiality Agreements Sometimes the old adage “less is more” can be a smart business posture: Employers may get more value from less restrictive covenants. Just as a non-solicit may be more effective than a non-compete, one more less onerous restrictive covenant – the confidentiality agreement – can, in some circumstances, be the most effective of all. “A confidentiality or non-disclosure provision prevents the departing employees from disclosing or using the pro- prietary or confidential information of their ex-employers, or that of their employers’ customers,” says Hwang. After defining the nature of the organization’s sensitive informa- tion, the agreements state that the signers will take mea- sures to keep it secret. “The information in dispute does not have to be a ‘trade secret,’ but must simply be confiden- tial, proprietary, or not publicly available.” Because the legal system of every state recognizes the right of businesses to protect their sensitive information, confidentiality agreements are generally highly defensible in court. They can be signed by any employee who has access to sensitive business information. They provide valuable evidence that an employer has taken steps to communicate the importance of discretion to employees.


Luring Star Performers Now for the other side of the coin. Employers need to be careful about violating a competing business’s restric- tive covenants when luring away a star performer. The legal fees and time required to defend one’s actions can be costly, even when a court strikes down the first employ-


Automotive Recycling


er’s covenants as unreasonable. “Some employers draft restrictive covenants knowing they will not be enforce- able but will scare people into behaving as desired,” warns Mathis. “Employers with deep pockets can cause a lot of trouble.” Take some prudent precautions during the hiring pro-


cess. Ask what agreements the employee has signed with his current employer. The individual who never signed a non-compete might have signed an agreement not to solicit the certain customers or to recruit coworkers. “When a new employee is hired it’s a good idea to get a verification or agreement the person is not taking confi- dential information from somewhere else,” says Ahmad. “And also that the employee is not subject to a restric- tive covenant that they have not made the new employer aware of.”


When determining the risk involved in poaching, employers also need to examine their conscience: If the goal is not to attract a skilled employee but to cripple a competitor by grabbing trade secrets, hiring the indi- vidual can be actionable in court. “You may simply see a very talented person performing for another firm and you think you can give that indi- vidual a better deal,” says St. Antoine. “That won’t give rise to a cause of action. But you can be the target of liti- gation if you have some other element in the picture, such as an effort to get insider information.” Employers should also avoid tarnishing the picture by spreading false and damaging information about the employee’s current company. “If an employer falsely tells a coveted person that his current employer is going out of business, that is ‘trade libel,’ a special form of ‘libel and slander,’” says St. Antoine.


Changing Laws Non-competes, non-solicits and confidentiality agree- ments form a viable defense for employers looking to protect valuable business information. But restrictive cov- enants must balance the needs of the employer with those of the employee. Employers must periodically review all agreements to ensure they continue to comply with state laws that are becoming more protective of workers on what employers can prevent them from doing. “The viability and enforceability of a company’s restric- tive covenants, particularly non-competes, are more likely to be the subject of rigorous review today than in the past,” says Hwang. “To ensure enforceability when it counts, employers should review the scope and terms of such doc- uments to ensure they are sufficiently and narrowly defined to meet their legitimate business interests.”


Award-winning journalist Phillip M. Perry has published widely in the fields of business management, workplace psychology and employment law. A 20-year veteran, Perry is


syndicated in scores of magazines nationwide. May-June 2021 // 51


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