Employee Poaching

Houston Employee Poaching Attorneys

Is Poaching Employees Legal? Know Your Rights

Competition among rival businesses is nothing new, but there are some tactics that simply aren’t legal practices. Competitors may vie for the same superstar salesperson, or they might bid for similar investors, clients, or partners, but some competitive tactics aren’t supportable, and they can result in repercussions. Employee poaching, or employee raiding, is one such tactic.

If a competing company wishes to strengthen its team, it might attempt to do so by stealing away employees from other companies. Or, if an employee moves to a competing company, they may attempt to move their team over with them, creating a mass exodus that can be detrimental to the company losing employees. This process, employee poaching, isn’t outright illegal, but it is frowned upon and, more importantly, it can violate certain business laws.

Is a competitor raiding your employees? Call (713) 909-7323 or contact us online to review your options.

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What Is Employee Poaching?

Employee poaching occurs when one competitor hires multiple employees from a competitor’s company. Assuming the company acquired these new workers intentionally, the term is called “poaching,” or “employee raiding.” Although poaching employees isn’t illegal as a direct offense, there are several ways in which the practice is considered unlawful. As a result, individuals or companies found guilty of employee raiding may face legal consequences.

Is Employee Poaching Illegal?

Employee poaching isn’t illegal in the state of Texas, but it often violates employment contracts, such as non-compete and non-solicitation agreements. A non-compete agreement can include provisions that include scope of activity, location, and rival company employment, among other things. If employees break that agreement by moving to a new place of employment, they could face legal ramifications such as injunctions, lawsuits, and monetary damages.

Non-solicitation agreements, on the other hand, can prevent employees from working for competitors or bringing clients or other employees with them if they leave their current employer. Essentially, this type of employment contract prevents employees from using their current job position to help them in future business prospects. Employee poaching, by nature, can directly violate a non-solicit provision.

Additionally, employee poaching could be considered unlawful if it is related to the misappropriation of confidential information, theft of trade secrets, unfair competition, or breach of duty of loyalty. In any of these cases, the wronged employer may attempt to sue the employee or the competing business for wrongdoing.

Can I Sue a Competitor for Poaching My Employees?

While employee raiding isn’t illegal in and of itself, the offense is often associated with other illegal business practices, such as violation of non-compete agreements or the theft of trade secrets.

Employers may ask the courts for an injunction to stop the improper competitive activity and pursue actions (such as a lawsuit) to recover financial damages if a non-compete agreement is violated or if protected trade secrets have been misappropriated and used against them.

What Damages Can I Collect If I Sue?

If an employer has grounds to pursue litigation for employee poaching, such as the violation of a non-compete or non-solicitation agreement or misappropriation of trade secrets, they could receive compensation for damages to their business. The amount and type of damages available depends on the circumstances and underlying agreements.

Generally, damages sought for employee poaching may include:

  • Actual Damages: Former employers may seek monetary or compensatory damages as compensation for lost profits related to the breach of a non-compete agreement. The employer must provide evidence of the losses.
  • Unjust Enrichment: The employer may pursue reimbursement for the defendant’s unjustly gained revenue – the profits gained from a competitor misappropriating your trade secrets.
  • Exemplary Damages: In cases involving malicious conduct, and where there is sufficient proof of wrongdoing, the court may require punitive damages as a form of punishment up to two times the amount of actual damages.
  • Liquidated Damages: An employer may include a clause in the employment contract stating that the employee will be subject to a fee if they breach the contract. Liquidated damages may be an actual amount or a formula for calculating the amount that the employee owes the employer. The court will decide whether the clause is fair before requiring payment in full.
  • Court Costs and Attorney Fees: The successful party may request court and attorney fees as part of the settlement, but the court will determine whether the unsuccessful party’s actions warrant payment for these costs.

In addition to financial compensation, an employer may also seek injunctive relief. Injunctive relief usually takes the form of a Temporary Restraining Order or Temporary Injunction to stop the damaging behavior while the matter is being litigated.

Once a court has heard all the evidence and legal arguments (either through motions or at a trial), it may also enter a permanent injunction if the court feels that damages alone will not make the injured business whole.

How Much Does It Cost to Sue for Employee Poaching?

The services of most attorneys and support staff, such as paralegals and legal assistants, are provided on an hourly basis. The number of hours billed will depend on multiple factors, including:

  • Your objectives;
  • The complexity of your case;
  • The condition of your records and financial documents;
  • The existence and enforceability of employment agreements; and
  • How well you protect confidential or proprietary information.

Some matters can be resolved in a matter of days or weeks; some matters take longer. As soon as you suspect that something may be amiss, contact an experienced business attorney to weigh your options. Move quickly to enforce your rights. We’ve had clients tolerate the first, second, or even third instances of employee poaching before deciding to act. However, if you hesitate to enforce a known violation, the courts may question whether legitimate business interests are at risk.

Speaking to an attorney does not necessarily mean you will end up in litigation. It does, however, mean that you will be apprised of your rights and are better able to weigh your options.

How Do I Defend Against an Employee Poaching Lawsuit?

This is where the advice and experience of a Texas business law attorney come in handy. Our attorneys can gather evidence and review existing agreements to identify available defenses, such as:

  • The employer breached the employment agreement;
  • The restrictions in the non-compete agreement were too broad or burdensome; or
  • There was no violation of the Texas Uniform Trade Secrets Act.

If you’ve been served with an employee poaching lawsuit or received a “cease-and-desist” letter, call our law firm to discuss the facts of your case. We will work with you to defend your position and protect your interests.

How Do I Stop Competitors From Poaching My Employees?

First, let’s review your employment agreements:

  • Did your employees sign a non-compete agreement? Non-compete agreements are enforceable if they are reasonable in scope, duration, and geography, and part of an otherwise enforceable agreement, such as an employment contract.
  • Did your employees sign a non-solicitation agreement? Non-solicitation agreements generally prohibit your employees from contacting clients or customers to persuade them to do business with a new, different, or competing firm. Non-solicitation agreements may also prohibit a former employee from recruiting your employees.

Our law firm can intervene on your behalf and, if necessary, petition the courts to stop employees from the improper activity and pursue actions (such as a lawsuit) to recover money damages. Your non-compete or non-solicitation agreements themselves may also outline the consequences of violating the agreement.

Additionally, if a key employee is privy to proprietary business information, you may be protected by the Texas Uniform Trade Secrets Act (TUTSA).

Get Help With an Employee Poaching Lawsuit

If you are the victim of employee poaching, or if you were accused of poaching, our firm is here to help. We can assess your situation and propose a viable legal plan to protect your short- and long-term interests.

We value our relationships with our clients, and we know the type of stress and confusion that comes hand in hand with cases like this. However difficult your case may seem, our team can use our ample resources to create a strong case on your behalf.

Don't be a victim of poaching and take a stand today. Contact Hendershot Cowart P.C. to schedule a consultation with our firm (713) 909-7323.

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