Black Hats and White Hats: Tell Prospective Employees About Restrictive Covenants
(Part Seven in a Series)
You have an urgent need to protect the intangible assets of your business.
Your intangible assets make up 75 percent or more of the value of your business. Moreover, your employees take your intangible assets home at the end of each day, and you are left hoping that they bring them back the next morning. If you do not protect your intangible assets, you are leaving the health of your business to the whims of chance.
In your efforts to protect your intangible assets, however, you cannot forget that you are dealing with real people — often your employees — on the other side of the table. The way you work with them plays a big part in determining whether you wear a Black Hat or a White Hat.
Black Hats focus only on their objective: get the restrictions signed. They drop restrictive covenants and trade secret agreements on their employees unexpectedly and compel employees to sign the agreements without giving them time to consider or review the documents with counsel. Black Hats see nothing wrong in dropping a stack of oppressive restrictive covenants on a new employee during her first day on the job and telling her that she has to sign the documents as a condition of her employment. They are not concerned that she quit her job, sold her home, and moved her family from out of state to accept the job with Black Hat Enterprises.
White Hats, on the other hand, understand that protecting intangible assets is part of the company's culture of fairness and honesty. They live the Golden Rule, and do unto others as they would have others do unto them. White Hats inform prospective employees in the interview that they will be required to sign restrictive covenants, and give the applicant copies of any documents they will be required to sign. They encourage applicants to seek the advice of legal counsel, and will even tailor the scope of the restrictive covenant to meet the applicant's specific concerns in appropriate circumstances.
White Hats treat the person on the other side of the table fairly.
They do so first and foremost because it is the right thing to do. White Hats know, however, that at some point they may be required to defend the scope of their agreements and the manner in which they were implemented. It is much easier to defend those agreements when you have procured them fairly and honorably.
If you want to protect your intangible assets, you must Wear a White Hat. Tell prospective employees that they will be required to sign restrictive covenants, then implement those agreements using policies that are fair to the people on both sides of the table.
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Categories: Non-Compete Agreements,Trade Secrets,Black Hats and White Hats,Legal,Unfair Competition
Tags: Non-Compete Agreement Trade Secrets Black Hats and White Hats Legal Unfair Competition
Great advice, Scott. It never occurred to me that as a prospective employee, I should ask for copies of restrictive covenants.
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Handing out copies of the signed restrictive covenants benefits both employer and employee. It clarifies what the employee's obligations are upon departure, and helps emphasize the employer's White Hat status. I don't know why any employer would choose not to distribute a copy of the agreement, both before and after it is signed. If the employee knows what his obligations are, he can honor his commitment. If he chooses not to honor the commitment, it strengthens the employer's argument that the court must step in and order the employee to do so.
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On many different levels, this is great advice. Very nice post. The general principle that being an employee friendly employer is profitable is too often lost. This is a fine example of how treating employees right is right for the employer in many ways.
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Thanks for your kind remarks, Greg.
If an employer cannot enforce its non-compete agreements, it has wasted time, money, and other resources in developing the agreement. Perhaps the key factor in enforcing agreements is for the employer to be a "White Hat" who has taken reasonable steps to protect its intangible assets. Wise employers will enact their policies in fair and reasonable ways, thus ensuring that they can protect their intangible assets.
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