GOVERNMENT CONTRACTORS AND NON-COMPETE / NON-SOLICITATION AGREEMENTS
I would like to thank the Government for keeping my practice busy.
Why do the feds deserve such praise?
A great deal of people work for companies that call themselves government contractors. Yes, an entire industry exists to support, work for and with our government.
From IT people, to defense and intelligence, contractors are everywhere. And for the most part, these contractors work for companies that get hired to do alot of very complicated work. Many of these companies are also based in Northern Virginia – again, a blessing to me.
So the following happens with some frequency:
Smith, employee of US GOV. CONTRACTOR INC., gets assigned to a project with the Dept of. Whatever. The project last 9 months. The Dept. of Whatever has an 8 month contract with US Gov. CONTRACTOR INC. and decides at the end of the contract, not to renew.
The Dept. of Whatever however, really likes Smith and wants him to stay on and finish the project. Employee Jones of Dept. of Whatever tells Smith such, and then tells him US GOV. CONTRACTOR INC. no longer has the contract.
Smith assumes he can take the gig since his company has lost the contract. Smith also assumes Jones and the Dept. of Whatever has his back. Smith resigns. Shows up at the Dept. next week, where he sees his old colleagues cleaning up their desks. Smith gets a cease and desist letter. Jones, on behalf of US Dept. of Whatever says “Well Smith, we didn’t know you had a non-competition or non-solicitation agreement. So sorry. Have a nice day. We don’t like to get involved in litigation”
Smith ends up with no job. No contract and a potential lawsuit.
So, this not so fictional scenario invokes the following questions:
1. What should Smith do?
2. Can US GOV. CONTRACTOR INC do that?
Let us answer #2 first. YES. US Gov. Contractor Inc. can sue you for breaching the agreement, even if they lost the contract before you broke yours. Fair? hmm.. since when is life fair. Will US Gov. Contractor Inc win said lawsuit? Doubt they can prove damages, so no, I don’t they can win but that is not really why they sued.
Now on to question #1. What should Smith do?
Next time, Smith should not assume anything. He should talk to his employer, make sure they have work for him and if not, see if he can get a release from his contract. He should have also told US Dept. of Whatever and Jones, about his agreement.
Now, Smith should find a new job and assure his old company he won’t compete so he is not paying to defend a lawsuit.