Lure and Order

When the sales chief of a waste equipment company decided to work some place else, he knew what he could and couldn't do. The non-compete clause in his contract meant that if he were to stay in the same business, which he preferred, he'd almost literally have to move across the country.

He landed a job in the East, considerably beyond the boundaries set out in the non-compete clause, with the understanding and expectation that he would build a sales force for his new employer, starting with the existing team and then adding and subtracting until he got the staff where it needed to be.

As he began assembling his workforce, he knew he had an option that his old contract did not rule out: He could contact his former co-workers and try to convince them to come to work for him. Ultimately, he was able to snatch two sales people from his ex-employer.

The sales manager was able to raid his former employer because his contract did not contain a non-recruitment clause. This provision, which is far less common than a non-competition agreement, restricts or prohibits a former employee from luring his or her former colleagues into leaving their jobs and going to work for a competitor. The relatively few court decisions that deal with non-recruitment covenants range from wholehearted support to firm rejection.

In Georgia, for example, an unmistakably clear line of case law is hostile to anti-competition covenants. However, as a non-recruitment clause does not prevent an employee from carrying on his profession or trade, the courts will enforce — without regard to duration or territory — a promise “not to interfere with the contractual relationships of the [former employer] and its other employees.” [Harrison v. Sarah Coventry, Inc., 228 Ga. 169 (1971)]

Both California and Texas have statutory bans on non-competition agreements, but courts in both states have compared non-recruitment clauses to non-disclosure agreements, finding that they do not restrain trade and declaring them to be enforceable. Meantime, a Florida appeals court ruled that a non-recruitment clause may legitimately protect the “substantial investment [an employer] makes in specialized training for its staff.” [Balasco v. Gulf Auto Holding, Inc., 707 So.2d 858 (1998)]

Elsewhere, however, the situation is different. Until 2005, courts in New York had been upholding non-recruitment clauses because they don't violate public policy against restrictions on competition. Then, a Monroe County trial court ruled that such a covenant was a “restraint” on post-employment conduct and thus could not be more restrictive than necessary to protect the employers' legitimate interest. Finding that the employer had no legitimate interest in a stable work force and no confidential business information at risk, the judge struck down the anti-raiding clause. [Lazer, Inc. v. Kesselring, 13 Misc. 3d 427 (2005)]
Barry Shanoff
Legal Editor
Rockville, Md.