By Nick Yocca and Mark Yocca, Partners, The Yocca Law Firm
Every business wants an experienced employee, but experienced employees often come with risk of potential litigation from a former employer. This risk can be lessened, never eliminated. Consider the following general policies:
First, know your prospective employee. Many prospective employees may have signed confidentiality or non-compete agreements. Businesses should assess the enforceability of the agreements and whether the applicant’s job can be structured to avoid problems. Also, be careful not to elicit any of the former employer’s confidential information during this process.
Second, make sure your potential employee does not bring or use any protected information of the former employer. Without asking what the confidential information is, a business should ask the applicant in a non-judgmental way whether any information was taken from the former workplace. If any was taken, the applicant should return or destroy the material depending on the circumstances (for example, nothing should be destroyed if litigation is reasonably foreseeable). The applicant should always affirm in writing that he or she understands the business’s prohibition against any use or possession of trade secrets or confidential information of a former employer.
Third, be proactive. Instead of waiting for a cease and desist letter, businesses can send a letter of their own to the former employer advising of the new hire and explaining why any possible restrictive covenants are not enforceable or not being violated. This show of good faith may prevent a lawsuit, and also could put your business in a better light if the matter ends up in court.
Fourth, if litigation appears likely, consider being proactive in court. If the former employer is out-of-state, the California business may be well advised to file for declaratory relief in California before suit is filed in a distant, more costly and possibly less favorable forum.