United States: Hiring Employees Who May Have Non-Compete Agreements: Best Practices

Last Updated: January 11 2016
Article by Jonathan Krause

If your company's fiscal year follows the calendar year, you are in the process of preparing the 2016 FY budget and, in connection with that process, anticipating hiring needs. Unsurprisingly, ideal candidates may come from competitors or other companies that have valuable confidential information and customer relationships they want to protect. If these candidates have agreements with their current employer that appear to impose non-competition or non-solicitation restrictions, are you unable to make the hire? Not necessarily. Below are some best practices for hiring talent that have restrictive covenants with their current employer:

1. Determine Whether There is An Agreement. Early in the process, the company should definitively ask the candidate whether they are subject to any employment agreements or restrictions with their current employer. The answer may not be as obvious as it sounds: long-time employees may not recall the documents they signed when they started work and non-compete terms may be tucked away in incentive compensation plans unbeknownst to the candidate. The company representative interacting with the candidate needs to ask probing questions to determine whether any agreement exists. If candidates represent there is no such agreement, have them acknowledge as such in writing and make clear that employment is contingent on the accuracy of that representation (if the candidate would otherwise receive an offer). You don't want to buy potential six figure litigation because a candidate is lying to you or not doing a thorough search. You also don't want to become invested in a candidate without knowing the risk that the hire can bring to your company.

2. Assess Whether the Agreement is Enforceable. If the candidate has an agreement with post-employment restrictions, the company MUST ask for a copy of the agreement to review. Ignorance of the actual language will not protect the company and is more likely to get the company in trouble, as judges will not look kindly at a failure to ask for an agreement that the company knows exists. In consultation with legal counsel, the questions you should be asking include:

  • Does the agreement have non-competition, non-solicitation, or other restrictions?
  • Can the company live with the restrictions as drafted?
  • Are those restrictions enforceable under the applicable law based on scope of the restriction, duration, geographic scope, or the consideration the candidate received for entering the agreement?
  • How do the restrictions line up with the actual responsibilities performed by the candidate for the prior employer? Remember, unlike most contracts, these agreements will generally not be enforced solely on the contractual terms, but based on whether the restrictions are needed to protect legitimate protectable interests. This means, for example, that an agreement may not be enforced if it seeks to prevent a candidate from working for non-competitors or from calling upon potential customers that the candidate never dealt with at the prior employer.

3. Adjust the Job Duties or Impose Restrictions as Appropriate. If the candidate is attractive, the fact that he or she has post-employment restrictions does not have to be a deal-breaker. These restrictions are only enforceable to the extent necessary to protect the old employer's legitimate interests. In other words, if the candidate's employment with you would be in a position where he or she would be performing different job duties than what the candidate did for the old employer and these job duties are not competitive with duties performed for the old employer, the agreement may not be enforceable. Consider scoping out the position so that the candidate would not be performing job duties that should alarm the prior employer. For example, consider restricting a sales representative to a different territory or only to prospects the representative did not service for the prior employer. You can also consider imposing these restrictions on the job duties for a period less than the time provided in the agreement if you conclude the duration of the agreement's restrictions are too long. The scoping process is a partnership among the business, legal, and HR to determine what restrictions are reasonable that appropriately limit litigation risk but still let the company get value from the hire.

4. Instruct the Candidate on Not Taking the Prior Employer's Business Information. Under no circumstances should a new hire take or keep the prior employer's confidential information. Hires should be specifically instructed that they are not to take such information, that in their final days with the old employer they should avoid looking at confidential files that are unrelated to the performance of job duties, and they should make sure to return all documents to the old employer. Employees, whether because of bad intent or temporary panic, are often inclined to take documents out the door for their benefit or as a crutch. A hire's attaching a thumb drive to the work computer or taking a client list "just in case" often leads courts to enforce agreements they otherwise would not be inclined to enforce because they conclude the employee is a bad actor who cannot be trusted. The result is the company ends up paying legal fees in litigation, loses a desired hire when the restrictions are enforced, and ends up with a black eye in the public.

5. After Hire/Resignation, Consider Proactively Contacting the Prior Employer. When a key employee leaves for a competitor, there is an inclination to fear the worst and rush into litigation. Under appropriate circumstances where the hire's duties have been scoped out so that you think you have reasonably addressed the old employer's legitimate concerns, consider pro-actively contacting the company to lay out the restrictions and the instructions you have provided the new employee regarding the non-disclosure of the former employer's confidential information. This path may be sufficient to reassure the prior employer and prevent litigation or position the company as the benevolent actor in the event of litigation because you can demonstrate that you have attempted to address whatever legitimate needs the old employer may have. This approach may not work in every hiring decision, depending on the company's relationship with the prior employer and the nature of the hire.

A candidate's non-competition agreement does not need to be the end of the recruitment process. With careful planning and proactive consideration of the potential issues, the company may reap the benefit of desirable talent without incurring litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.