If a new employer hires an employee in violation of the employee's valid non-compete agreement, the employee may be liable for a breach of contract. Since the new employer was not a party to the non-compete agreement, the new employer can't be liable for breach of contract.
However, the new employer may nonetheless face liability for tortious interference with contractual relations. In New York, it is unlawful for a third party to intentionally interfere with the contractual relationship between two other parties, absent a proper purpose. An employer can thus bring a claim for tortious interference with contract against a competitor who intentionally entices an employee to work for it in violation of the employee's non-competition or non-disclosure agreement.
The elements of a claim for tortious interference with a contract are: (1) a valid contract between plaintiff and a third party, (2) defendant's knowledge of the contract, (3) defendant's unjustified, deliberate inducement of the third party's breach of the contract, (4) actual breach of the contract, and (5) damages resulting from the breach. Sony Music Entertainment, Inc. v. Werre (2010).
The defenses by the new employer to a tortious interference claim typically include: (1) the new employer was unaware of the non-compete agreement; (2) the non-compete agreement is not enforceable; and/or (3) the new employer was justified in hiring and continuing to employ the individual in question.
"Where there has been no breach of an existing contract . . . a cause of action for tortious interference with contract will not lie." Bajan Group, Inc. v. Consumers Interstate Corp. (2010). Moreover, if the new employer had no knowledge of the existing non-compete agreement when it hired the employee, the new employer will not be liable for tortious interference with contractual relations. Delfino Insulation Co., Inc. v. Jaworowski (2008).
It is important to always consult with a New York non-compete attorney before hiring an employee that is subject to a non-compete agreement with a former employer.
