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What happens when a former worker breaks a non-compete?

On Behalf of | Nov 7, 2022 | Employment Law |

As a New Jersey employer, you have to compete with many other businesses regardless of your industry. Every new hire means a bit of risk for the business. Employment contracts help mitigate some of those risks.

Especially if workers will have access to trade secrets like proprietary recipes or client lists, your company may require that they sign a non-compete agreement when you hire or promote them. By limiting their right to work for a direct competitor or start a competing business after leaving your company, you protect your organization from unfair competition and violations.

What can you do if you discover that a former employee has violated their non-compete agreement after leaving your company?

You may send them a formal warning

After reviewing the employment contract signed with the worker, you may confirm that they are in clear violation of your initial agreement. Many businesses will provide a written letter as a warning advising a former employee of how they are in violation of the non-compete agreement and what penalties they risk if they do not cease their current activities.

In some cases, people will recognize that they have done something they should not have done and will leave their job or start looking for employment instead of trying to start a business in the same industry as your company. Other times, they may ignore your notice or outright inform you of their intention to continue doing what they have done so far. In such scenarios, you will need to go to court.

The civil courts can help enforce your agreement

The good news for employers frustrated by the unethical misconduct of former employees is that the New Jersey courts frequently do uphold non-compete agreements. Although state lawmakers have introduced legislation intended to reduce the use of such agreements in New Jersey and impose more restrictions on them, it is still possible to enforce an existing agreement.

Provided that the worker receives something of valuable consideration for making their concessions to your company and that your company drafted the documents with appropriate limitations, you could prevent the former employee from continuing to compete against you or possibly even pursue damages.

Understanding the most common steps businesses take when dealing with an issue related to an employee’s contract can help you better respond to a situation involving unfair competition.