Pros and Cons of Suing the Ex-Employee’s New Employer

July 11, 2012
By Scott Holt on July 11, 2012 9:58 AM |

When a company pursues a former employee for violating a noncompete agreement, one of the first decisions may be whether to include the ex-employee’s new employer in the lawsuit.  While attorneys who practice in noncompete litigation differ in their views on this issue, a number of factors are usually relevant.

For instance, will suing the new employer interfere with the ability to obtain jurisdiction over all of the parties?  In situations involving a contractual forum selection clause, the court may not have personal jurisdiction over the new employer.

Another issue is whether the new employer might be more inclined to pay the ex-employee’s litigation costs if it were a defendant.  In many cases, individual defendants do not have the resources to defend these types of suits, and without their new employer’s assistance, they will often want to resolve the case early (and more favorably to the plaintiff’s advantage).

But there are also reasons to include new employers as defendants where possible.  In the case involves potentially significant damages, the new employer is usually in a better position to pay than the ex-employee.  This added liability also may help foster settlement discussions prior to trial.