Post-Employment Agreements
Posted July 3rd, 2012
With the economy continuing to limp along, companies are taking any precautions they can to maintain a competitive edge. And this includes restrictions on employees after they have left a company.
Because of the slack economy, companies now more than ever are doing everything they can to protect their most valuable assets, which include information, skilled workers and their customers. And they are more willing now to enforce the provisions of any post-employment agreements, usually through an injunction against the former employee demanding that the former staff stop whatever he or she is doing that violates the agreement.
Companies make these agreements because employees, when they leave a firm, take with them knowledge about the company’s business strategy, customer contacts and pricing structures that could help a competitor.
These restrictions are built into employment contracts to stop employees from working for a competitor, taking away customers or suppliers or even contacting former clients or customers or suppliers.
There are limitations to the restrictions, though. The law only allows a company restrictions that are necessary to protect its business interests. The length of time the restrictions are in effect, the geographic area they apply to, and their overall scope all need to be looked at. These need to be balanced against the former employee’s seniority and role in the business. The particular agreement needs to be individualized for the business and the employee in question. A standardized agreement will not work.
If you are looking at a job candidate with such an agreement, you need to find out the terms of the agreement as soon as possible in the hiring process to determine what provisions are enforceable and your company’s ability to follow the provisions.
In regard to their enforceability, you need to see how the provisions have been drafted – are they too broad, do they conform to the criterion of protecting only the company’s legitimate business interests?
If the provisions in the agreement are enforceable, you need to consider how this will impact the performance of the person if he or she should be hired.
When your San Francisco-area company needs terrific staff members for temporary or full-time work, contact Bayside Solutions. We look forward to learning how we may be of service!
