How To Prevent Poaching of Your Business’s Employees

Originally published by Leiza Dolghih.

Many companies have been taking advantage of the economic turmoil caused by the pandemic to poach employee talent that they otherwise would not have been able to recruit or afford. Companies that have experienced layoffs, furloughs, salary reductions or bonus freezes, are particularly vulnerable to raiding attempts by their competitors. However, there are several steps that every business can take to minimize the likelihood of employee poaching.

Asses Incentives to Stay – if your company cannot afford salary raises or bonuses this year, consider offering other incentives that can make up for it. A flexible work schedule, work from home arrangements, childcare subsidies or arrangements, increased time off (paid or unpaid), stipends towards educational classes that will help employees advance their skills, and other perks, may be able to partially make up for the lack of a compensation increase.

Consider Profit Sharing or Equity Grants – a lack of compensation increase this year can be overcome with an arrangement that promises long-term gains for employees who stay with the company past the crisis. A typical equity grant has a four-year vesting period with 25% of shares being vested each year that an employee stays with the company. Alternatively, profit sharing arrangements allow companies to reward employees without giving them equity in the business.

Make Sure Employees Have Signed Non-Competition and Non-Solicitation Agreements – if your employment agreements do not already contain post-employment restrictions, you should consider asking your employees to sign non-competition and non-solicitation agreements. The key is to keep such agreements reasonable, which means restricting only such geographic area as is necessary to protect the company’s business. Each agreement should also include an employee non-solicitation clause prohibiting departing employees from enticing their co-workers to leave the company. If the agreements are overbroad, employees are more likely to violate them and the courts are more likely to redraft them to be more narrow.

BOTTOM LINE: Preventing employee-poaching is a proactive process, requiring both – the right incentives for employees to stay and iron-clad employee non-solicitation and non-competition agreements with key employees.

Leiza Dolghih is a labor and employment board certified partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice. Her practice includes commercial, intellectual property and employment litigation. You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.

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