Can’t We All Just Get Along?  --  The Skinny on Non-Competes

About once a month I get a phone call from a staffing client, let’s call them Extremely Reasonable Staffing Agency (ERSA), who is up in arms because their top recruiter or their Sales Manager (we’ll call him, Murphy) has flown the coop and perched at the nearest competitors office. 

“They are going to steal all of our clients unless we get a restraining order!!!!” 

At that point we pause to examine our options. 

Plan A:  Aforementioned, phone answering attorney, proceeds to burn the midnight oil, drafting a law suit against Murphy, documenting all of the trade secrets and client accounts he has been given access to.  Then Mr. Attorney proceeds to formulate legal arguments on why the non-compete agreement Murphy signed when he went to work for ERSA should be enforced by Judge Ratchett, who hates those things anyway.  Then Mr. Attorney moves on to draft affidavits and coordinate meetings with ERSA and the paralegal the next morning so that it can all be signed in front of a notary.  The morning dash to the courthouse results in a long wait in the lawyers lounge for Judge Ratchett to read ERSA’s application; and/or coming back at 2:00 p.m. because the case in front of us took three-and-a-half hours and the Judge wants to eat some lunch.  Perhaps Judge Ratchett is in a good mood after lunch and we get an ex parte temporary restraining (TRO) order signed.  Upon that victory, the order must be walked down to the court clerk so that we can get expedited citations issued.  Mr. Attorney then, refreshed by afternoon coffee, hires the best process server to serve Murphy (at his highest emergency rate).  Over the next several days, Mr. Attorney attends several other hearings during which Murphy’s attorney (he had to hire one since he was served, usually paid for by his new employer) asks Judge Ratchett to dissolve the TRO.  The action culminates by spending hours preparing for the evidentiary Temporary Injunction hearing that Judge Rachett set for hearing fourteen days later.

OR…………

Plan B:  I pick up the phone and have the following conversation with the Owner of Shifty Staffing Company (we’ll just call him Dale):

Me:      Hi, Dale, this is Mr. Attorney, David Anderson.  I represent ERSA.  I’m calling because I understand you recently hired one of their Sales Managers, Murphy, who is under a non-compete.

Dale:  *stammer, stutter, murmur* Uh, yeah.  What do you want?

Me:      Well, rather than spend the upwards of $15,000.00 in legal fees it would take to get a Temporary Injunction against Murphy and sue your company for tortious interference with a contract, we’d like to see if we can work something out.

Dale:   What do you have in mind?

Me:      Don’t call on our clients.

Dale:   Come again?

Me:      Dale, just don’t call our clients during the duration of the non-compete.  Look, there is plenty of business out there for people who are willing to go get it. We think people like Murphy should be able to work for a living.  We just don’t want you using Murphy to steal the clients we helped him develop.  We want you to honor his agreement not to compete with us, at least to that extent.  What do you say, Dale?

I have had this conversation numerous times.  It has saved tens of thousands of dollars in unnecessary legal fees and spared folks the seemingly endless aggravation that comes with litigation.  With few exceptions, these phone calls dealt with lower level and mid-management employees who were subject to the non-compete.  While there are certain times when you have to pull the trigger with both barrels (usually involving long-tenured upper level employees), most of the time you are better off just getting along.  Giving Dale the chance to do the right thing up front just makes sense.  Sometimes Dale will surprise you.

One other thing.  I have never made that phone call to a staffing agency who is a member of the Texas Association of Staffing who did not step up and honor the non-compete agreement.  TAS members know how to get along.  We need to get the rest of the staffing companies in Texas to follow suit.

 


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