MY FORMER EMPLOYER SENT A DEMAND ABOUT A NONCOMPETE. WHAT SHOULD I DO?

Every day, employees receive cease and desist letters from former employers. Many of these letters are attempts to intimidate employees. In some of these letters, employers claim that the employee has violated a noncompetition agreement. The employer generally threatens to sue unless the employee immediately takes specific actions. Many employers claim that an employee has stolen confidential or proprietary property, including customer lists, trade secrets, or intellectual property. 

Receiving a cease and desist letter is frightening. An employee’s livelihood, career, earnings, and reputation are threatened. And then there is the risk of a judgment. 

So what are your options? Here are a few.

Throw your Cease and Desist Letter in the Trash

Everyone knows that Michigan’s courts don’t enforce noncompetition agreements or protect trade secrets or confidentiality, right? Wrong. Dead wrong. Many employees have the perception that most noncompetition agreements are unenforceable. This is not true. Michigan’s courts can and do enforce noncompetition agreements.

Further, courts often protect employers when there are claims involving confidentiality, trade secrets, and intellectual property. You can throw away your cease and desist letter. But do so at your peril. Just don’t act surprised when facing an expensive and damaging lawsuit. 

Hire an Attorney to Send a Detailed Response

Your second option is to hire an attorney to write a detailed response. Hiring an attorney to review and respond to a cease and desist letter is a smart move for most employees. The attorney can help articulate why the cease and desist letter is wrong or why a court is unlikely to enforce an employer’s claims. More importantly, hiring an attorney to send a response signals to the employer that you will not roll over. This changes the cost calculation. An employer who receives a response from an attorney must factor in their legal costs and exposure.  As a result, employers are generally more willing to find quick, cost-effective, and reasonable compromises if an attorney is involved. This saves both sides time and money. 

Go on the Offense

If you think your former employer will refuse to stand down, regardless of the merits of your position, you might consider taking the first shot. In other words, hire an attorney and file a suit before the employer files. Employees can request declaratory relief when the court “declares” the parties' rights. This gives all parties certainty about what is and is not acceptable. 

An employee might also include counterclaims requesting damages (i.e., money) from the employer. In other words, the best defense to a cease and desist letter might be a good offense. This is especially true if an employee has strong claims against the employer. For example, if an employee has potential claims under Michigan’s Elliott-Larsen Civil Rights Act, Bullard-Plawecki Employee Right to Know Act, or Michigan’s Whistleblower Protection Act,  an employee might be able to leverage those claims against an employer’s cease and desist letter. 

Conclusion

Employees need to be careful with cease and desist letters. Failing to respond is an invitation to litigation. And responding without an attorney can signal to the employer that an employee can be bullied. As a result, employees should always respond to cease and desist letters with experienced counsel. With a skilled and knowledgeable attorney, many employees find that they can completely eliminate the threat of a cease and desist letter or even go on the offensive.