Legal pitfalls in hot labour markets

Watch for non-solicit, confidentiality obligations
By Fred Somerville
|Canadian HR Reporter|Last Updated: 11/17/2006

When the labour market heats up, so does the potential for legal issues in the hiring and recruiting of employees. Here are a few things to keep in mind:

Confidentiality obligations: Virtually all employees have confidentiality obligations and some, particularly knowledge workers, have written confidentiality agreements. When recruiting such individuals, particularly from a competitor, make it clear they must strictly observe all confidentiality obligations to their previous employers. Specify during the interview, and in the offer of employment, that if a potential conflict of interest arises, the recruit should notify his superior and then abstain from any participation in that matter.

Non-solicit obligations: When hiring, find out whether an individual has any written non-solicitation agreements with prior employers. Non-solicit obligations can also arise at common law when an individual has developed a relationship with the customers and clients during her previous employment. If so, she may have a legal obligation to not solicit those customers for a reasonable period of time after the end of her employment, generally six to 12 months.

Non-competition restrictive covenants: There may be an existing contractual agreement between a candidate and her current employer that would prohibit her from working for the company. Candidates should be asked during recruiting if they’ve signed such an agreement. If not, that should be confirmed in the offer of employment. If there is, then contact a lawyer for legal advice before making an offer.

Obligations to give notice: The obligation to give reasonable notice is imposed not only on employers but also on employees. In provinces such as Alberta, Manitoba, Ontario, Nova Scotia and Prince Edward Island, statutory provisions require employees to give notice — typically one week for less than two years of service, two weeks for more. In Newfoundland and Labrador, an employee who has worked continuously for an organization for more than 15 years must give notice of six weeks.

A recruiting employer should address the issue of notice when it proposes a start date under an offer of employment. It should also specify that the employee has to provide written notice to the current employer, and if this notice is inadequate, the recruit should notify the new employer to work out another reasonable start date. This would help the hiring employer avoid allegations that it’s inducing the candidate to breach statutory or contractual obligations to the current employer.

Hiring a new employee’s former report: When a company wants to hire someone after having already hired her former manager or supervisor, significant legal issues may arise. The former manager would be aware of confidential information about the employee he’s obligated not to divulge. Such information would include salary, the bonus or incentive plan that might be in place, the type of work and other duties the employee performed, her proficiency in performing that work and the benefits, entitlements and perks at her current job. In such cases, the former managers or supervisors should remove themselves from the hiring process and have this documented.

Fred Somerville is a partner at the Calgary office of Borden Ladner Gervais. He may be reached at fsomerville@blgcanada.com or at (403) 232-9437.

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