Ahh, Valentine's Day; romance is in the air, even in the workplace (which makes any employment lawyer cringe).  But what happens when love is lost at work? A non-compete clause in the various types of agreements you keep with employees can be the basis for a love-hate relationship that can last for years.  Here's four pieces of advice to ensure you are protected when a relationship sours with an employee under a non-compete:

  • 1. Words Matter.  Many business owners mistakenly believe that a simple confidentiality or non-disclosure agreement with an employee is sufficient to protect their business. It's not.  In Texas, employees already have a common-law duty not to disclose your company's confidential information and trade secrets.  An agreement that simply does that is not sufficient.  Words matter, especially in a contract.  Therefore, you need to ensure that your ex-employee will not solicit your other employees, misappropriate your trade secrets, engage your customers, work for a competitor, perform competitive services, disparage you and your company, or interfere with your business. Hope for the best, but plan for the worst, and make sure your non-compete reflects exactly what you need to protect.
  • 2. What's Mine is Yours.  A carefully drafted non-compete can bind an employee for years after they leave you.  What do they get from you in return?  If only the job or money would do; but Texas courts have not allowed those items to serve as consideration for the non-compete.  You have to give them the heart of your business: the confidential information, trade secrets, highly-specialized training, or stock options that make your business valuable. It's the soulful intricacies of your business that have taken you years to perfect that an employee cannot take away from you to compete.  An iron-clad non-compete will not do you any good if you did not actually provide the consideration for the non-compete. Beyoncé warned us all: "If you want it...put a [BIG] ring on it."
  • 3. Consider the Other Man/Woman.  Generally, only signatories to a non-compete can be bound by the restrictions.  That is why if other parties are involved in a transaction (i.e. in the sale of a family business), non-competes are executed with those related parties, including spouses.  Often, however, it is your employee's spouse who plays a key role when an employee leaves to work for a competitor. An employee may use his/her spouse's name to set up a competing business. An employee may download your confidential information or trade secrets onto the computer or smart phone of a spouse in an effort to conceal his/her wrongdoing. An employee may use a spouse's e-mail address to solicit your clients or vendors. In some cases, the entrepreneurial relationship between husband and wife is so strong, that courts become involved to ensure the protections of a non-compete are in place.  [In a first case of its kind, a Massachusetts court ruled last year that a probate court had the authority to order a spouse to enter into a non-compete when the family business was awarded to one spouse as part of a divorce. Cesar v. Sundelin, 81 Mass. App. Ct. 721 (2012)]. In the employment context, however, you may have to be more creative to tackle this issue. For example, when an employee leaves, you may have her sign a verification that she has not taken any company information and property, including that she does not possess any of your confidential information and trade secrets on any personal/home computer, on devices owned by a spouse or family member, or that she has not copied such information or disclosed it to family members and any other third parties. Later, if you find any evidence of any potential involvement by a spouse, consider whether you should also include the spouse in your lawsuit against your ex-employee for interfering with your business. A little marital discord can serve as a good incentive to get a case resolved quickly.
  • 4. All's Fair in Love and War. After a break-up, the temptation to check up on a former love is too strong (especially if you can do it anonymously on social media). In the employment context, it is well worth giving in to temptation. When an employee leaves and you suspect he now works for a competitor, keep a close watch. Track their public activity on LinkedIn, Facebook, Twitter, or other social media. Set up a Google alert to see what they are up to and whom they are courting. While this form of stalking is risky when they are a current employee, as a former employee/current competitor, they are fair game. Many unfair competition lawsuits are now based on evidence gathered on social and electronic media. Also, remember that non-compete cases involve decisions based on equity – what's fair. As long as you resist the temptation to bad-mouth or disparage your ex-employees in minor battles, you can use social media to your advantage to win the war. After all, love – even with ex-employees – is a battlefield.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.