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I am thinking of hiring my staff from my competitor's firm, are there any legal issues in doing so? Both for my firm and for the new joining staff member? Additional details: To be more specific, I am planing to hire the director of sales with a salary and equity and he will come with some good industry contacts. The employment state is NJ. |
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Depends on if the employee signed an enforceable non-compete contract. Honestly even an unenforceable one might be problematic because even if they can't win they might still sue you into oblivion. |
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In practice, companies hire people away from their competitors all the time. The legal effects in the US depend a lot on the state. In California, with some unusual exceptions, section 16600 of the Business and Professions code generally makes non-compete clauses illegal and unenforceable. That doesn't mean a competitor in California couldn't sue you or the employee, just that it would probably be a very quick court case. Around Silicon Valley, I've seen tons of people jump ship to direct competitors and nobody says boo. I gather things in Texas (for instance) are quite different, and the law and courts there seem quite happy to support non-compete clauses. |
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IANAL, but a) it depends on if the employee has a non-compete signed with the competitor, b) the state and its legal behavior wrt non-competes, and c) the competitor's war coffers versus yours. Unless there are really crazy benefits to open up that can of worms, I'd stay out. |
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