THE QUESTION
I signed a non-compete clause limiting me from accepting a job at a like or similar company for a period of one year after my employment. Though a year has not passed, I have conditionally accepted an offer from a company that is in the same industry. The new company provides one business line only, one that my former company does not provide. Would this violate my non-compete clause?
THE FIRST ANSWER
Shane King
Partner, litigation practice group leader, McLeod Law LLP, Calgary
To provide a more specific answer, we would need to review the non-competition clause itself. However, the court would generally look to the intent of the clause, and what is actually sought to be protected.
It sounds like the intent is to restrain you from competing against your former employer, and it would be very hard for them to argue that you are competing against them, when the area you are working in is not one that your former employer is engaged in at all.
If the areas are in fact overlapping, the court would also look to ensure the non-competition clause is properly and validly entered into, which generally means it must either be entered into before you start work, or you were provided with some form of consideration, such as a bonus, in order to enter into the clause.
If the employer merely foisted this upon you, in exchange for you keeping your job, it is likely it will not hold up.
THE SECOND ANSWER
Doug Ewen
Certified Human Resources Executive , Midland, Ont.
Generally speaking, non-compete clauses cannot stop a person from working for a competitor. However, I will leave the specifics of non-compete issues to legal advisers.
What will be important is to ensure that you communicate openly and honestly, primarily with your new employer, but possibly even with your previous employer.
My suggestion is that you disclose to your new employer, in writing, that you are subject to a non-compete clause. Go on to explain that the new company does not compete with your previous company's product lines and, as a result, should not violate the agreement. Provide them with a copy of your agreement.
In your letter, be careful not to disclose any aspects of your previous employer's business lines, customers, technology, pricing models or other proprietary information, as this would likely be in violation of your agreement. Your previous company may notify your new company of the agreement, creating a potentially awkward and uncomfortable situation if you have not disclosed it.
Depending on your agreement, you may not have a duty to notify your previous employer of your new job. However, if your agreement specifically calls for notification, follow through. As with your new company, do this in writing, assuring them that their confidential information will be protected per your agreement.
Finally, once you join your new company, follow through with your commitments and do not share proprietary information as the non-compete will still be in effect. Handling the situation in this manner allows you to maintain a high ethical standard. Also, your new company will likely appreciate your honesty, as you will now be entrusted with their proprietary information.