Should you enforce a non-compete clause for an employee you fired?

The CEO of a startup asks: “We just learned that our former VP Sales, who was terminated a few months ago, recently started working for our direct competitor. It is a violation of the 12 month non-compete clause in his employment contract. What would you recommend?”

My answer:

Whether or not you should enforce a non-compete depends on the circumstances under which the employee left and how strong the employee is. If he’s great and chose to leave your company voluntarily, demand that the non-compete be honored. If you fired him, don’t enforce the non-compete. It’s not worth the bad karma.

If you let him go, you don’t want to stand in the way of him getting another job. His best opportunities will always be in something closely related to his last job. For this reason, non-competes are often morally questionable, and in some jurisdictions they’re unenforceable.  Even if he has info about your company, the info will rapidly become dated and valueless.

Many companies play tougher than this, but I’ve personally found that helping ex-employees to be successful is a better way to be. People will leave your company for many reasons; you want them to feel positively about it whenever possible. You want people to be proud that they are alumni of your company, and to view their time with you as an enabler for their subsequent career success.

So consider sending him an email congratulating him on the new job, letting him know you are not planning to enforce the non-compete clause, and wishing him luck. Maybe even send him a small gift.

How would you answer?

Notes:
(1) Cf. “help them transition out of the role by providing a reference, reaching out to your network” in Four principles for how to fire someone correctly.
(2) Remember that If you fired a senior executive, you should identify from this list what went wrong.

One thought on “Should you enforce a non-compete clause for an employee you fired?

  1. I’d give a hard “No” recommendation. Non-competes are immoral. You shouldn’t get to control the lives of people who you are not paying anymore. This violates their fundamental personal freedom, and this is the reason why these clauses are illegal (or at least unenforceable) in California.

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