- Industry staffing and recruiting leader Randstad has filed a lawsuit in the U.S. District Court for the Northern District of Georgia against former employees, demanding injunctive relief and damages. The suit alleges that three Randstad employees — including one national director for the company — set up a competing staffing firm “just down the road” while still employed by Randstad.
- Randstad claims that the former director took his entire team, including two direct reports (both of whom were executive recruiters for the firm) as well as their office administrator. The company says the former director knew the two were under "restrictive covenants" that prohibited them from unfairly competing against Randstad. All four members of the group allegedly left the company without notice in January 2018 and moved directly to the new competing firm.
- The two executive recruiters' non-compete and confidentiality agreements prohibited competition within 12 months of employment and within the geographic area, and the agreements also barred them from soliciting Randstad customers or recruiting its employees for 18 months.
While non-compete agreements have received a lot of media attention of late, most states allow them. It’s estimated that about 18% of American workers are subject to the agreements.
They're notoriously difficult to enforce, as they generally must address legitimate business concerns, namely that a breach of the covenant will cause harm to the employer. Additionally, the agreements generally must also allow former employees to be able to work. They generally shouldn't be used as a retention tool, experts say; instead, they're best used to protect trade secrets or an investment in highly specialized training.
The Randstad case will certainly be interesting to watch, especially because the company isn't afraid to serve as a test case. It recently won a favorable ruling from the 6th U.S. Circuit Court of Appeals after some of its recruiters alleged that they were misclassified under the Fair Labor Standards Act's and entitled to back overtime pay.