When a key employee resigns, the question always asked is “what are your plans?” If the employee is subject to a non-compete agreement, the answer may not always be truthful, particularly if the employee plans to work for a competitor in violation of a non-compete restriction. This is why many employers wisely include a provision in their non-compete agreements which requires employees to disclose the fact that they are going (or intend to go) to work for a competitor. But even with such a provision many departing employees do not disclose their intentions.
In fact, it is common for a former employer not to learn that the employee is violating a non-compete for weeks – or even months – after the employee has been working for the competition. If the employer does not learn about the violation until months later, the question then becomes, for enforcement purposes, when does the restricted period begin to run? In other words, does it begin from when the employer found out about the violation or does it begin to run as soon as the employee went to work for the competition? The answer depends largely upon the agreement itself.
If the non-compete agreement includes a properly drafted tolling provision the answer, at least in Delaware, seems clear – the restricted period will not include any time during which the former employee violated the restriction – assuming that the restricted period itself is held to be reasonable. In such case, the employer gets the benefit of what it bargained for, i.e., a full restrictive period free from a former employee’s breach.