Non-compete

If you have received a “cease and desist” or other scary lawyer letter saying that your former employer believes you to be in violation of a non-compete, non-solicitation, and/or nondisclosure/confidentiality agreement, you are not alone.

Sometimes lawyers will even go so far as to send these letters to your new employer, either outright accusing you of having breached the agreement or at the very least warning them that you are bound by this agreement so that they are put on notice.

What should you do?

  1. Don’t panic. As with most things that may seem scary at first, don’t panic. There are some lawyers whose tones and word choices will make it sound like it is the end of the world. To the extent possible, try not to let that get to you. Focus on the content.
  2. Re-read the lawyer letter and try to ascertain what in particular they seem to be taking issue with. Maybe highlight or underline key words if that helps you process it.
  3. Re-read the agreement, particularly any sections the lawyer letter referred to. Do you agree with their interpretation of it?
  4. Review and gather anything that could be relevant to this. For example, if you shipped a laptop back to the company, find the shipping receipts. If you have relevant emails or texts (without improperly getting onto the company’s email), save those to PDF format.
  5. Assess, as best you can, whether you think there is a chance you have violated the agreement (or intend to) – whether intentionally or not.
  6. Do not destroy anything (unless you are clearly supposed to).
  7. Consult with a lawyer.
  8. Determine an appropriate response (if any)

Whether working with a lawyer or not on this, determining the appropriate response can be key. If your assessment is that the company sends out these letters to all employees who have left as just a form letter and you are reasonably confident that you have not breached the agreement, one route might be for you or your lawyer to respond as simply as possible, by stating that to the best of your understanding you have not done anything in violation of the agreement. Period.

If the situation is more uncertain than that (which is often the case), it may take a bit more work. It’s important to take it seriously and not play ostrich. However, it is just as important not to panic.  Don’t see this as the end of the world. Just take ACTION.

To the extent that you can, try to put yourself in the company’s shoes. If the company sold cookies and you worked in the R&D department and you learned about their secret cookie recipe, you can’t go and share that cookie recipe with your new job or with the world by internet. That recipe belongs to the company and is its property just like the desks and chairs in the office.

In most situations it’s not that clear cut. One issue that often comes up is that someone who works in sales may have known clients or potential clients even before coming to work for the company. Can that person continue to reach out to those entities after separation, if there is a “non solicitation of customers” clause in your employment or separation agreement?

At the risk of sounding like a lawyer… it depends. It depends on how the contract is worded, which state’s laws applies, and the circumstances in the company. Looking at this in generalities in general: For purposes of trying to work toward a resolution of the issue, just do your best – whether you agree with it or not – to understand what is important to the company, whether it’s reasonable for them to expect to think of the thing as “theirs”, and what the parameters of the restriction would be in real life.

Meanwhile, don’t forget your own interests – and don’t just cave automatically. In general people have a right to pursue their livelihoods. If the company’s attempt to enforce a provision of an agreement against you means that you’re going to be out of work — or out of work in the industry in which you have been working and have expertise and relationships – don’t just give up and go start working at an ice cream shop just because they sent you a letter. Speak with a lawyer!

While it’s always risky to breach the provision of a contract – and indeed, you might get sued if you do – also keep in mind that companies do not always choose to actually pursue the issue. They might just let it go, if only because it’s too much of a hassle and/or they don’t want to pay their own lawyers a ton of money to pursue it.

Most agreements like these are ambiguous. Sometimes they are just poorly drafted or are generically cut and pasted from other documents in ways that make them difficult to enforce. But more than that, in all circumstances, these are documents that you signed when you first came on board, possibly years ago. They probably refer to things like “inventions” or “customer lists” that, depending on the nature of the company and your role in it, may be completely meaningless or irrelevant, may be extremely relevant and important, or may be ambiguous as to what qualifies as those things.

These agreements are a matter of contract law which means that each state’s laws are likely to be the ones you must apply. States vary extremely widely as to how broad these agreements can be. Some states won’t enforce them at all. Often in the agreement there will be a “choice of law” and/or “choice of venue” section. Many times these will be where the company is headquartered, which may or may not be where you live. It’s important to be aware of which state’s laws apply because sometimes it can really make a big difference.

If the situation has evolved into a conflict, one strategy is to formulate an addendum to the contract that says that the original contract was written before you started actively working there so did not have clear referents, but now that you are leaving everyone can agree that this is what is meant by “customers” or “competitors” or whatever the disputed issue is. Ideally they would provide you an actual list. For example, for a non-compete, they would provide you with an actual list of companies that they would consider to be their competitors and/or customers and prospects they claim you cannot solicit.

The bottom line is that these can be murky waters for you, and for your employer.  They will probably talk to a lawyer about this.  You should too.

Written by Penn Dodson