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Employer May Not Prohibit Former Employees from Soliciting Current Employees for Work
Description Missouri appeals court held that a restrictive covenant that all employees were required to sign was unenforceable when it went beyond protecting trade secrets and other proprietary property. The company could not prohibit former employees from contacting current employees about outside employment opportunities.
Topic Employment Law
Key Words Restrictive Covenant; Non-Solicitation Agreement; Trade Secrets
C A S E   S U M M A R Y
Facts Schmersahl, an accounting firm, required all employees "to sign a Confidentiality and Non-Solicitation Agreement which contained a non-solicitation covenant that prohibited plaintiff's employees, first, from soliciting business from its clients and, second, from soliciting or encouraging its employees to terminate their employment" for three years after leaving the firm. McHugh, who had signed the agreement and later left to work for another firm, later told a former colleague about opportunities at his new firm. That employee, who did not act on the information, told Schmersahl managers, who then sued McHugh for damages for breach of the non-solicitation agreement. The trial court held for McHugh, ruling that the covenant was too broad and could not be enforced. Schmersahl appealed.
Decision Affirmed. The covenant not to solicit or to encourage former co-workers to consider alternative employment is a restrictive covenant in restraint of trade. It does not protect trade secrets or customer contacts, and so is unenforceable. Covenants that limit individuals in the exercise or pursuit of their occupations are in restraint of trade. The employer may protect trade secrets and customer contacts, and the employee has a duty to protect such proprietary property, but the employer does not have a proprietary interest in its employees at will or in their normal employment skills
Citation Schmersahl, Treloar & Co., P.C., v. McHugh, 2000 WL 1051831 (Ct. App., Mo., 2000)

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