Hiring a Competitor's Employees: Minimizing Litigation Exposure, Defending Competitor Lawsuits

Hiring an employee from a competitor involves a great deal of risk due to the employee’s access to the competitor’s trade secrets, customers and other employees. A competitor often will take aggressive measures to protect its proprietary information and resources from the new employer.

Key employees are often bound by restrictive covenants with the competitor, usually in the form of noncompete, nondisclosure or nonsolicitation agreements. Such restrictions could limit the employee’s value to the new company and put the new employer at risk of lawsuits for trade secret misappropriation or breach.

Counsel advising employers that are considering hiring from a competitor can provide guidance on the extent of the risk of the hiring and steps to minimize the employer’s exposure. The more transparent the recruitment and hiring process, the less likely the new employer will be subject to liability or to frivolous claims.

Even if a competitor does not have valid trade secrets, it may claim that it does to prevent its key employees from working for a competing business. Knowing your rights when hiring competitors’ employees also helps when faced with the prospect of meritless litigation.

Listen as our authoritative panel of attorneys experienced in employment and unfair competition laws explains an employer’s legal risks when hiring a competitor’s employee, strategies for minimizing litigation exposure, and key defenses to claims for misappropriation of trade secrets or breach of restrictive covenants.

1. Due diligence strategies before recruiting a competitor’s employees
2. Best practices for employers during the hiring process and employment relationship
3. Defending claims brought by the competitor

The panel will review these and other key issues:

• What risks are inherent in hiring key employees from a competitor?
• What special considerations come into play when a new employee is subject to a noncompete, nondisclosure or nonsolicitation agreement with a competitor?
• What are some best practices for employers to follow when hiring a competitor’s employee to protect the company and avoid litigation?
• What potential claims might the competitor bring against the new employer—and what are some effective defenses to those claims?