Does a company violate the law by hiring away an executive who is still under contract with another employer?

Does a company violate the law by hiring away an executive who is still under contract with another employer?

No, according to the 4th Circuit Court of Appeals.  The 4th Circuit recently dismissed such a claim in its decision in Discovery Communications, LLC v. Computer Sciences Corporation, No. 13-1969.  That case involved a chief accounting officer who allegedly breached his contract to work for his employer, Discovery Communications, LLC (Discovery), for a set length of time.  According to Discovery, the executive breached his employment contract by resigning early to go to work for another large employer, Computer Sciences Corporation (CSC).

Discovery sued CSC for tortious interference with contract because CSC hired the executive away even after Discovery told CSC that he was still under contract.  Discovery warned CSC not to hire the executive after he gave notice of resignation, but before his last day of employment.  Rather than heed this warning, CSC went ahead and hired the executive anyway after he left Discovery.

The federal district court dismissed Discovery’s lawsuit on the basis that it did not state a valid claim.  Upholding the decision, the 4th Circuit reasoned that the complaint did not allege any intentional interference with contract by CSC.  It only alleged that CSC knew about Discovery’s claim of breach after it extended a job offer to the executive and did not retract it.  Because the lawsuit did not allege that CSC did anything after receiving notice of the alleged breach, other than hiring the executive as previously planned, CSC did not commit a tort.  Discovery did not allege that CSC knowingly caused the executive to resign early or otherwise instigated any breach of contract.

This case shows that an employer need not confirm that an employee is not currently under contract before offering employment.  The outcome may have been different if the executive had been bound to post-employment restrictions, such as a non-compete, or if the new employer knew that the executive was employed for a set length of time before it made its offer.

Because of the complexity of the laws that apply to hiring, companies are well-advised to seek counsel when making a job offer.  Albo & Oblon regularly advises employers regarding their legal obligations in the hiring process.

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