Non-compete agreements are between employers and employees. However, what happens when an employee leaves an employer is subject to a non-compete, and then that employees new employer somehow interferes with that non-compete? The new employer can be sued for tortious inference with a non-compete agreement. Minnesota has well established case law that supports this cause of action.
There are 5 elements that are usually required for a tortious interference with contract:
- Existence of a contract
- Alleged wrongdoers knowledge of the contract
- Intentional procurement of its breach
- No justification
The Supreme Court has stated that if an employer is aware of the new employee’s non-compete before hiring and the employee later breaches the non-compete with his former employer, a new employer can be liable for tortious interference and any damages. In the case of Callok v. Medtronic Inc., 573 N.W.2d 356 (Minn. App. 1998), the employer knew of the existence of the employee’s non-compete before hiring that employee. The new employer even went so far as to tell the new employee that he believed that the new employee would be subject to the non-compete. The new employer met with Callok, the new employee, and offered him the vice president position, even though he was aware that Callok was under a non-compete agreement. The Minnesota court found tortious interference of a non-compete because the new employer had knowledge of the facts which would have led to full disclosure of the non-compete agreement.
Damages for a tortious interference with a non-compete agreement can be an injunction from the new employee for the employee to work at the new employer. However, the former employer can also be entitled to pecuniary damages, including payment of its attorney fees and other expenses to prosecute the claim against the employee. Tortious interference of a non-compete by an employer can also be wrongly telling the employee that non-compete is unenforceable or that the employee can violate the contract due to the relatively slim chance the employer would seek to enforce the agreement. Any of these actions can be deemed violations of a non-compete agreement.