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Good morning!
"I am prepared for the worst but hope for the
best." This sentiment, voiced by former British
Prime Minister Benjamin Disraeli, has certainly been
the watchword for these first few months of 2010. Most
of my clients are doing just that — honing their
budgets and cutting expenses to the bone, while
continuing to identify niches and staying busy doing
the work that comes their way.
Kudos to the strength and resilience of the small
business community. We survived 2009 and are
tackling 2010 with determination!
Some companies are achieving rapid growth in the
stodgy old publishing industry with an emerging
technology that has already changed the reading
habits of millions of consumers. Join me for a cup of
coffee
tomorrow
morning at SBANE's monthly breakfast and learn how
Russ Wilcox, founder of E-Ink Corporation, scaled the
heights of Amazon's Kindle.
Cordially,

Marijo McCarthy, Esq.
President, Widett and McCarthy, P.C.
A Small Business Law Firm
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| Three Ways an Applicant's Non-Compete Agreement Can Stop You Cold |
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There is some good news as we enter the first
year of a new decade: some employers are
cautiously beginning to add new employees as
business begins a torturously slow climb back.
But there is some not-so-good news as
well: Many smart, qualified, potential employees
are still subject to non-compete agreements with
former employers.
This doesn't mean you can't hire that superstar sales
person you've had your eye on. It simply means
that you need to sharpen your interviewing skills and
dig deep enough to uncover any restrictions to the
hire. Restrictions, interestingly enough, that won't
necessarily show up on a resume or in a reference.
Two years ago, I
undertook a "point, counter-point" dialogue based
upon a column written by Scott Kirsner, a high tech
writer for The Boston Globe, on the issue of
non-compete agreements. My intention was
simply to
point out that there are two sides to every story and
that Scott had advocated for only one.
Given the comments I received at the time —
on
both sides — I followed up the next month with
pointers for small business employers on who should be asked to
sign a non-compete and why.
And here we are, two years later, re-visiting a topic
that isn't going quietly into the night!
If you are an employer fortunate enough to be in
hiring mode, here is an interview question you should
ask your final applicants: "Are there any
restrictions with your former employer which would
prevent me from hiring you? For instance, when you
left your former employer, was there an existing non-
compete agreement in place or did your severance
arrangement include signing one as a condition to
receiving a severance package?"
If the answer is "yes," don't give up… simply dig
further.
Here, for example, are some possible restrictions
on your potential new hire and my suggestions for
addressing each situation:
- Your company and the former
employer of
your applicant might be competitors in your
industry. If so, and the applicant has a
non-compete agreement in place, your applicant may
be
restricted from working for you for the period of the
non-compete and, vice versa… you might be
restricted from hiring that applicant.
Unless there is a very short period of time left on the
non-compete restriction, this is probably the end of the
line with this applicant.
- Your company might be a
customer of
your applicant's former employer. If so, depending
upon whether there is a "non solicit" restriction in the
agreement and what that "non-solicit" restriction
prohibits, your applicant may be restricted from
working for you for the period of the non-solicit. And
again, you might be restricted from hiring that
applicant.
It's possible as well that the applicant may simply be
restricted from soliciting customers of his/her former
employer. In this case, you may be able to hire
provided you restrict the applicant's activities
regarding these customers. This requires more
digging.
- Your company might be talking
with your
applicant's former employer right now about doing
business. If so, depending upon the restrictions
in
the applicant's agreement, your applicant may be
restricted from working for you for the period of the
non-compete. And, you guessed it, you might be
restricted from hiring
that applicant.
In this case, it may be an opportunity for you to tailor
and define the applicant's activities, with the consent
of his or her former employer [depending upon how
eager the former employer is to sign you up as a
customer!].
The point here is that while you should never
(ever) ignore these agreements when hiring, you don't
necessarily need to come to a screeching halt with the
applicant. The situation calls for more
investigation, just as you would if any response during
the interview process were to raise a red flag.
A review of the non-compete agreement [in concert
with your company's attorney], some patience [if the
non-compete period were about to expire, the
situation may work itself out], and maybe even some
probing with the former employer [there may be
exceptions in some of these non-compete
agreements
worth exploring], are all in order.
As with most business situations, sometimes it is
just a matter of careful investigation, persistence and
patience, or a combination of all three, to reach a
satisfactory result.
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| Contract Tidbits |
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Recently, a client asked me the difference
between "liquidated" damages and "punitive
damages." He had been called for jury duty and
was worried about understanding the legal jargon
thrown around.
I reassured him that lawyers and judges make
very
sure that members of juries have a clear explanation
of the terms they need to consider and that in any
case, it was unlikely he'd be involved in a case
involving punitive damages.
But, for the uninitiated:
"Liquidated damages" can best be described
as the result of two parties to a contract deciding, in
advance, the dollar amount agreed upon as damages
if one party defaults on the contract. It's a method used
in a contract to reach a reasonable estimate, where
possible, by quantifying the dollar amount which
would result in the event of one party breaking their
promise under the contract.
"Punitive damages," on the other hand,
represent an actual punishment for some
egregious wrong [and usually don't get awarded in a
standard contract case].
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| About Us |
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Widett and McCarthy specializes in advising small
business owners in the area of contracts.
Whether
reviewing a contract for services with your customer,
negotiating a lease with your landlord or finalizing
financing documents with your lender, we make sure
your best interests are protected.
In addition, and for
those clients whose successful growth requires a
more comprehensive relationship, we act as "general
counsel:" On-call when you need us as a sounding
board, legal advisor and strong right hand.
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Free Audio Download |
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Some of my best ideas come from my clients!
A
new client e-mailed to thank me for the CD on
Contracts I had sent to him ("Contract Essentials
for
Small Business Owners") and asked if he could
find it
on my web site.
Well, now he can and I invite you as
well to visit, listen and learn some useful tips on best
practices developed during 25+ years of helping
clients get the most out of their contracts.
Follow
this link to the free download on our
home
page.
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Widett and McCarthy, P.C.
1075 Washington Street
West Newton, MA 02465
Telephone: 617.964.5559
Facsimile: 617.964.5529
Email
Us | Visit Our Website
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