July 17, 2014. Florida says no. A recent Florida case, Aerotek v. Zahn, refused to hold an employer liable when it unknowingly hired two employees who were subject to a non-compete. The competing company who held the non-competes sued the new employer for tortious interference with contract after it hired and continued to employ the workers.
The new company moved to dismiss, stating that, at the time it hired the two employees, it did not know of any non-competition agreements. The former company argued that, even if the new company did not know at the time it hired the workers, they committed the tort of interference with contract when they continued to employ them after told of the non-competition agreements. The Florida federal court disagreed, reasoning that the employees’ breach of contract occurred at the time they began their new jobs at a competing firm. The injuries and damage merely continued after the new employer learned, several months later, that they had been subject to non-competition agreements.
Does this mean companies are off the hook if they hire an employee who has signed a non-competition agreement with a competitor? Not necessarily. First, it is unclear whether other courts will follow Florida’s lead. Second, the new company would be liable if it knew of the non-competition agreement at the time of hiring. Third, the company’s new employees, if not the employer, would face expensive and distracting litigation when the former employer sues, which will no doubt hurt productivity, if nothing else. Finally, from a practical standpoint, does an employee who does not honor his past commitments look attractive to a new employer? Is that the kind of employee a company looking to hire would want?
Copyright: elenathewise / 123RF Stock Photo