Hiring an Employee From a Competitor

In certain industries there are employees who are in demand by the competing employers because these employees have special skills.  Whether an employer can hire an employee from a competitor can be surprisingly difficult to determine.  Under California law employees generally have the right to work for any employer they choose.  California courts have determined that there is a strong public policy in giving employees the freedom to work for whomever they want and for that reason restraints on employees (e.g. noncompetition covenants) are considered suspect.  Employees can be restricted, however, from competing with the current employer to some extent.  Any restrictions on an employee must be narrow to be enforceable and must be focused on protecting the employer’s confidential and proprietary information and not focused on merely preventing the employee from moving to a competitor.  Therefore, if the recruited employee will not disclose or otherwise use any of the prior employer’s proprietary information (which includes, patents, formulas, trade secrets, software code, etc.), that employee is free to work for anyone else.

Although this is not an exhaustive review of the ability of employees to compete with the current employer, this post describes the basic legal principles.  One should be aware, as a practical matter, that any time a key employee leaves and joins a competitor there is a likelihood that the new employer could be accused of misappropriating the prior employer’s confidential and proprietary information.  If an employee leaves and creates software, for example, with similar features, the prior employer would certainly be displeased.  And the new employer may be liable for misappropriation through the employee if those features can be considered proprietary to the prior employer even if there was no code copied.

This discussion is not legal advice, a solicitation of you as a client, nor the engaging in the practice of law in any jurisdiction.  This discussion is merely for information/education and should not be relied upon for legal advice by anyone because the facts discussed may be different from your own situation.  If you need legal advice, consult a qualified attorney.  For more information please visit my website at www.palacioslawoffice.com.


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About Elio Palacios, Jr.

Attorney Elio Palacios, Jr., represents individuals, corporations, entrepreneurs, small businesses, startups and early stage businesses, physicians, dentists, and healthcare businesses in corporate, business and commercial transactions and litigation. He also counsels employers and individuals on visa, immigration and naturalization matters. Visit www.PalaciosLawOffice.com to learn more.
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