How best to handle a breach of a non-compete agreement?

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How best to handle a breach of a non-compete agreement?

We have 2 employees that came to us from another business. That business is now trying to sue us on the grounds that they had a non-compete. It turns out that our 2new(ish) employees did sign non-competes with this business (their former employer) for a 1 year period. We had no idea about the existing non-competes; we never asked during the hiring process as they are low level manufacturing type positions and not management. What legal ground does the former employer have to come after us as the new employer? Should we terminate their employment as a sort of proactive stance. What can the former possibly stand to benefit from this sort of lawsuit?

Asked on November 17, 2011 under Employment Labor Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

While you should get a lawyer to represent you any time someone threatens a lawsuit,

1)  If your businss is not a party to the contract--i.e. you did not sign the non-competition agreement--you cannot be sued. Contracts only bind those who sign them.

2) The two employees, however, could be sued if they violated their non-competes. Their former employer could seek monetary compensation and/or see an injunction (court order) barring them from working for you.

2a) If the employees are sued, you could then possibly join in the lawsuit to help  them defend it, as a party affected by the suit. However, again, whle the employees can be sued, you cannot be sued directly for their breach.

3) What does the other company gain? It can hurt a competitor; it can prevent any expertise, etc. learned at it from being used to help the competition and take market share; and/or it may simply be "personal"--management at the other company does not like these employees leaving for you, and intends to take any/all legal actions they can.


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