Often times when an employee leaves for employment at a competing business and is under a non-compete, the question arises who other than the employee should receive the threat letter to cease and desist violation of the non-compete? Often times, the former employer will consider sending a threat letter to the new employer. At other times if the non-compete language is suggestive of such, customers in the industry might also receive a threat letter. Recently, there was a case decided in the Eastern District of Michigan, Bonds v Philips Electronic North America, where the former employee sued his former employer for sending a letter to his new employer causing his termination. The Court ultimately decided in favor of the former employer, but the analysis leaves the door open for a former employee to sue his former employer in the event that the non-compete threat letter crosses the line.
Often times courts must determine several threshold issues in a non-compete agreement such as whether the non-compete agreement protects the legitimate interest of the employer, and whether the non-compete agreement is reasonable with respect to geographic scope and duration. If a former employer sends a non-compete threat letter to the new employer, depending upon how it is phrased, they run the risk of suit by the former employee in the event that that court elects not to enforce the non-compete agreement as written. In my experience, more often than not, the courts do not enforce the non-compete agreement exactly as written.
Therefore, employers should take great care in deciding to also send a non-compete threat letter to the new employer, or others in the industry. The Traverse Legal office in Michigan recently had a case where the former employer sent an industry wide letter with their interpretation of the non-compete restrictions, which a court subsequently disregarded. That former employer ended up with a lawsuit for tortious interference with business relationships based upon the court’s determination that the non-compete not be enforced as expressly written by the former employer.
The bottom line is that you should seek competence legal assistance in determining who other than the former employee should receive a non-compete threat letter as there is risk that you could end up on the wrong side of a lawsuit in the event that the non-compete agreement is not specifically enforced as written, which is the case in many instances.
The non-compete lawyers at Traverse Legal are here to assist you and guide you through the process of making the determination of who should receive a non-compete threat letter other than the former employee.