When an employee decamps, breaking a contract and taking the secret

sauce formula and customer list with him, the result can be an unholy
legal mess.

How To Bypass Legal Fallout From Employee

Poaching
Companies can bypass that grief by looking at how and why they hire,
says Carlos Becerra, an attorney with the southern California firm of
Tredway Lumsdaine & Doyle.

"The biggest thing employers need to understand is that there can be a

fine line between promoting and growing your own business and
engaging in acts of unfair competition," said Becerra.

Employers shouldn't target one particular company for their personnel

needs. National advertising is the way to go, says Becerra.

And employers need a clear purpose in mind when adding new workers
to the payroll — not to destroy a competitor but to bolster their own
enterprise.
"You're not hiring the employee to bring clients or proprietary
information with them," Becerra said. "You're hiring them for their skills
and experience."

A well-written employee handbook helps, he says.

Make sure it's up to date and addresses the company policy of not
bringing confidential or proprietary information from a previous
employer, he advises.

Secret Sauce

Many employers don't get across how important trade secrets — the
secret sauce recipes — are to a company, says attorney Kurt Kappes of
New York and Miami-based law firm Greenberg Traurig.

That's not at the time of hiring, not during the course of employment and
sometimes not even when the employee leaves, he says.
"A lot of it is educating the workforce," says Kappes, who is based in
Sacramento and is a visiting professor at the University of California at
Davis.

When an employee has signed an agreement not to work for a

competitor for a certain period of time after leaving — a noncompete
agreement — it can get tricky.

"At least in California, some employees will go to work for a new

employer and then turn around and sue the previous employer to throw
out the noncompete agreement," Kappes said.

Employers may want to consider whether a particular hire justifies the

potential downside.

"One thing they need to do is figure out whether the hire is worth it," said
Kappes. "From a business standpoint, the question is, do they want to
take the risk?"

It can work out in the new employer's favor, he says, pointing to a 2011
wrangle between two tech giants that he mentions both to clients and to
his UC Davis class on trade secrets and employee mobility.
Hewlett-Packard (HPQ) hired an IBM (IBM) general manager to come
over as a senior vice president. HP structured the job so that it involved
different work, different geographic responsibilities and a different level
of responsibility, Kappes says.

IBM sued the HP employee, alleging violation of a noncompete

agreement — and lost.

In a lawsuit-happy environment, human resources professionals have

their hands full making sure they do things right.

Wayne Perrett knows the drill. He looks for professionals from engineers
to salespeople in his work.

Perrett heads human resources for ComAp, a Roscoe, Ill., subsidiary of a

Czech Republic-based company that designs and manufactures electronic
control systems for nuclear plants and offshore drilling engines.

The company has 20-25 employees and expects to have four times that
many by 2018, Perrett says.
He likes to work with recruiters to find candidates, ideally those already
employed elsewhere.

"My job is to work with a recruiter and get that person to convince our
candidate to talk with me," Perrett said. "I'll convince the candidate, if
they're the right one, to come and work for us."

One of the first questions Perrett asks a prospective employee is whether

the person has a noncompete agreement in place and what the terms are.

That question and others that follow are for the protection of all
concerned, Perrett says.

Companies' reputations can sustain damage in the hiring process. A

company doesn't want to get known as one that "steals" competitors'
employees. Bad for ethics, bad for business, Perrett says.

"Reaching out to competitors is not illegal," he says. "There are some land
mines, though. One is from a reputation standpoint."
Do The Research

Companies wanting to recruit that ideal new hire need to do their

research, says Sally Stetson, principal at Philadelphia area-based
executive search firm Salveson Stetson Group.

No blanket emails to the competition's employees, for example, says

Stetson, who heads her firm's human resources practice. Research means
determining who might be the right choice and honing in on them and
them alone, she says.

Companies should keep in mind that potential new employees may have
heard bad information about them, she says.

"It's a tradition to bad-mouth competitors," Stetson said.

If it gets to the stage of sitting down and talking to a potential new hire,
that's the time to clear the air, she says.

"In the interview, it's important to dispel any myths about the company
conducting the hiring," Stetson said.
Interviewers themselves need to watch that they don't reveal more than
they intended to, she says.

"It's a little bit of a tightrope for the interviewer," Stetson said. "It would
be problematic if the interviewer disclosed sensitive information and the
employee was not hired."