Last week, Jawbone filed a lawsuit against its competitor, Fitbit. Their claim is that Fitbit lured away their employees, and these employees came with business plans and other proprietary information. While California law pretty much makes non-compete agreements worthless, taking actual business plans to a new company can certainly land you in court.

Whether or not Fitbit did this (and, in the interest of full disclosure, I wear a Fitbit and have for a very long time), this lawsuit can serve as a reminder that poaching from your competitors can bring about bad results. Here are 5 things you should think long and hard about before hiring from your direct competitor.

1. What do these people do? It really doesn't matter where your HR person came from. Employment law is the same at every business, and while a particular onboarding program might be proprietary, it's unlikely to pose a problem. Engineers, on the other hand, who have spent the last 5 years working diligently on a device that directly competes with your own could be risky.

2. Ensuring your employees' integrity. Some employees think you'll be extra pleased if they can walk in and spill the beans on your competitors. In some cases, they have no idea that doing so violates the law. What plan do you have in place to make sure that the ideas coming out are unique to your company and not stolen from across the street?

3. Have you checked their non-compete agreements? While this isn't a case about non-compete agreements (California only allows non-competes in very rare circumstances anyway), you may run into legal problems if you hire people who are bound by non-compete. You need to review the actual legal document before bringing them onboard. I'm not a fan of non-competes except for very narrow purposes anyway, but lots of companies use them.

4. Bringing someone in from another industry lowers your risk of stealing secrets. Normally, stealing is quite intentional, but if you hire someone from a company that does almost exactly what you do, they may inadvertently bring up things that their former bosses said or suggest plans that your competitor has. If, instead, you hire someone from a different industry, when they say, "hey, at my last job we did X," they aren't likely to be violating any laws.

5. You want new and better ideas than your competitor. While it's tempting to say, "Company X is doing better than we are! Let's bring in one of their engineers to do the same thing!" it's far better to bring in someone different so that you don't end up being the same as your competitor.

Remember, even if there are no non-compete agreements in effect, you can't just steal your competitor's ideas-even if you've successfully stolen their employees.

Published on: Jun 1, 2015
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