You’ve left a job you hated and found something you love. Just when you thought your life was on the right track, your new employer gets a letter that says something like, “Hello new employer. Your new employee John Smith signed an agreement saying he wouldn’t work for a competitor or solicit our customers for two years. Unless you fire him immediately, we’re going to sue you, your mother, your dog and everyone you ever met. Sincerely, former employer’s lawyer.” Your new employer either fires you or tells you to come back when you work things out.
What can you do? Here are 10 steps you need to take to protect yourself when your former employer tries to enforce your noncompete or nonsolicitation agreement:
• Get a copy of the agreement: Many employees don’t keep copies of what they sign or don’t even remember signing a noncompete or nonsolicitation agreement. It was probably in that giant stack of papers you signed when you started. Maybe it was called something sneaky like “Confidentiality Agreement.” If you don’t have a copy, ask the former employer for a copy of the executed agreement. You won’t know what your restrictions are (or even if you really signed) until you see it.
• If they refuse to give a copy: Some employers won’t give you a copy of the agreement they’re trying to enforce, which is silly. How are you supposed to know what you aren’t allowed to do if you don’t have a copy? I suggest dealing with this kind of bullheaded refusal with an email (with a read and delivery receipt) saying something like, “It is my understanding that I do not have any restrictive covenants that would keep me from working for a competitor or forming my own business. If this is incorrect, please send me a copy of any and all agreements I signed or am alleged to have signed while employed by you within 72 hours from the date of this email. If I do not receive the alleged agreements by that time, I will assume I have no restrictions and will govern myself accordingly.” If they don’t respond or give a copy, then this could be evidence against them if they try to sue.
• Have a lawyer review it: A lawyer who handles employee-side employment law will be able to advise you what the agreement requires, whether you have any defenses to enforcement, and whether the former employer is overreaching. Sometimes the agreement doesn’t say what the employer claims it says. Many times, the agreement is not tailored to protect a legitimate interest other than preventing competition. You may be able to defend against the agreement or, more importantly, negotiate with the former employer to work out an agreement that doesn’t cost you your new job.
• Don’t ignore the letter: If you ignore the letter, your former employer will assume you’re doing something wrong. You’ll probably get sued. Ignoring it won’t make the problem go away.
• Don’t sneak around: If you try to cover up what you’re doing by using a fake name, putting your business under a relative’s name or being sneaky, a judge may assume you knew you were doing something wrong and slam you hard.
• Avoid soliciting former customers/clients: Even if you think the agreement isn’t enforceable, until you reach an agreement or get a court order saying otherwise, I’d suggest avoiding the former employer’s customers or clients. Soliciting or accepting business from former customers is probably the number one way to tick off the former employer into suing. If they do sue, it’s much better if you can honestly tell the judge that, while you work for a competitor, you’ve been avoiding former customers.
• Document your sources: If you do solicit former customers or clients, make sure you don’t solicit from any list or information you got from your former employer. If you are getting your potential customer names from publicly available sources (think Google, Dun and Bradstreet, chamber of commerce and industry directories) then document your sources. If you can prove that you contacted ABC Company because they were the 10th name on the Google search you did, and you simply went down the list, it will be difficult for the former employer to show they have any legitimate interest in stopping you from doing so.
• Don’t destroy evidence: Let’s say you’ve been contacting former customers. Don’t try to delete emails or destroy documents. You can get sanctioned for destroying evidence. The court will presume the evidence favored your former employer. You can make things way worse if you try to hide what you did.
• Your company has to be represented: While you can represent yourself in a lawsuit, that’s not true for a company. A corporation can’t be represented by anyone but a licensed attorney. If your company is sued, it needs a lawyer speedy quick.
• Think about suing for antitrust or tortious interference: A noncompete agreement that isn’t supported by a legitimate interest other than preventing competition may break the law. If they cost you a job you may also have a claim against them for tortious interference with your employment. You may be able to sue your former employer for antitrust violations and tortious interference.
Don’t panic if you get a nastygram from your former employer’s lawyer. You may have defenses to enforcement of a noncompete or nonsolicitation agreement. You may also have claims against a former employer who tries to enforce such an agreement, especially if they get you fired from your new job.
Donna Ballman focuses her practice exclusively on employee-side employment law. She can be reached at email@example.com
By Donna Ballman
Donna M. Ballman, P.A.
5001 S. University Dr., Suite G
Fort Lauderdale, FL 33328
South Florida Legal Guide 2015 Edition