Hi, my name is Alex Granovsky and I’m the managing member of Granovsky & Sundaresh. We’re an employment law firm with offices in New York City.
One of the most frequently asked questions we get has to do with non-competes. People ask us all the time: will this or that breach a non-compete?
What I tell every single one of those people: The answer is, “Who cares?” They’re not calling to find out if their conduct breaches the non-compete. What people really care about is whether they’re going to get sued for breach of that non-compete.
So let me help you evaluate that. Whether or not a person is going to get sued for breach of a non-compete has to do with money. If a person goes from company A to Company B and Company A loses a bunch of money, they’re likely to sue.
A non-compete, not-solicit, or non-disclosure. Any one of those agreements might make that lawsuit easier to win, but what spurs that lawsuit is the money. And here’s why; a lawsuit over a non-compete at its core is a lawsuit for breach of contract. Your employer is suing you for breaching the contract – in this case non-compete.
Every civil lawsuit breach of contract is a civil lawsuit. It’s got two phases. Phase 1 is liability. Phase 2 is damages. In Phase 1, the plaintiff – your former employer – has to prove that you’ve breached this agreement by going to a competitor and that it’s a valid and enforceable agreement. In doing so, they’re subjecting their agreement to judicial scrutiny. Does this hold up in court? Maybe not. A company, in deciding whether to sue, understands that they’re taking that risk in addition to all the costs associated with it.
The risk is only worth it if you can get through the liability phase – phase 1 – and get to the damages. In damages, the court asks, “Okay, company, in terms of dollars and cents, how much has employee’s departure and breach of this contract harmed you?”
If the answer to that question is “zero,” the company’s recovery is zero. So, it’s the money that spurs the lawsuit, the contracts will only change the likelihood of winning.
If you are thinking about a non-compete, you want to decide, “Am I likely to face a problem about this or not?” Think about the money. Will you going to New Co. cause Old Co. to lose money? If the answer is “yes,” there’s a likelihood you will get sued. If the answer is “no,” that likelihood goes way down.
If you want more concrete advice, contact our law firm. We do this for lots of people. We can review your non-compete for you and give you a real-time analysis. In any case, I hope this was helpful. Thanks for watching. Take care.