What to Remember When Hiring From Your Competitors

By Steven D. Weber Managing Partner, Stark Weber PLLC | December 10, 2017

Hiring an employee from a competitor can yield a skilled and qualified employee, but it can also yield negative repercussions. Prior to hiring any such employee, a hospitality organization should consider taking steps to mitigate the risk of those negative repercussions by developing a plan as described below.

When an employee leaves an employer, they may take information with them that they obtained during the course of their employment, either inadvertently or intentionally. Some of that information may be information that the employee's former employer desires to keep confidential, and out of a subsequent employer's hands. Examples of such information may include pricing strategies, business relationships, marketing strategies, and customer information.

To protect such information from disclosure and to mitigate the risk of competition by a departing employee, employers may utilize, among other things, employment agreements, restrictive covenants, non-competition agreements, non-solicitation agreements, confidentiality agreements, policy manuals, and physical and electronic security. Some of these measures, like a non-competition agreement, may extend beyond the term of the employee's employment, and may include restrictions on the geographic location that a departing employee may seek subsequent employment in and on what capacity an employee may operate.

Hiring a competitor's employee may be a tantalizing proposition, but a hospitality brand cannot ignore the potential repercussions of doing so. Those repercussions may involve a lawsuit alleging breach of any of the applicable employment restrictions mentioned above, tortious interference with the employer's relationship with the employee, or other allegations and claims. Developing a strategy regarding hiring employees from competitors, or from anyone else who has information that they are likely to seek to protect from a departing employee, may mitigate the potential negative repercussions associated with hiring such an employe.

Identifying candidates who work for a competitor or a sophisticated employer may be a good first step in the process of mitigating potential repercussions. This process should begin before the hospitality organization communicates with a candidate. Depending on the candidate's role at the competitor, it may be likely that the candidate had access to information that the competitor may contend is a trade secret, is confidential, proprietary, or would give another a competitive advantage if they were able to utilize that information with their new employer. Additionally, a large employer, with access to sophisticated counsel, is more likely to utilize measures that limit the ability of an employee to compete against their former employer or utilize information obtained during their employment.

Identifying and comprehending the significance of the candidate's current or past employer is thus an essential first step. From that information, a hospitality brand may be able to determine what measures are, or have been, employed by a particular competitor by simply having their own counsel research any lawsuits involving that competitor and a former employee.

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