When contracting new employees to work at your business, you must respect the different contracts they signed beforehand in their former position and the legal strictures they are bound by. Violating non-compete clauses or similar boundaries can lead your company to legal contention with the new hire’s previous employer.
This topic was brought up in a recent article for Mondaq that examined the delicate steps that must be taken when negotiating a new hire still serving out a legal obligation. The specifics of his or her contract need to be examined and worked around.
Although the legal risk in taking on someone with prior contracts can vary depending on the candidate, the burden is on the employer to do the research and move with caution, according to Daniel Aiken, the article’s author.
The most important step that a company needs to take when this situation arises is to thoroughly review and determine the parameters of the pre-existing legal boundaries that affect the potential hire in question. Aiken points out that by looking at this closely, a business may find some gaps in a policy previously thought to be completely binding.
“Inasmuch as most restrictive covenants will expire — sometimes in a matter of months — you may decide that the company can tailor the scope of the intended position so that the new employee can still add value, but not perform work that would violate the individual’s obligations to his/her former employer,” he writes.
An article that recently appeared in the ABA Banking Journal looked at the ways employee ownership can function for banks in particular, with restricted stock being one method to tie an employee to the company. According to the source, this is becoming more popular, especially for community banks.
These issues can be a risk for businesses, and they can represent a need for better risk assessment to assist in the process.
