Job changes can bring about legal questions
Published 12/10/04

If part of your New Year's resolution is to change jobs, there are several issues that you do not want to overlook.

First, you should make sure you carefully review any Employment Agreement you signed that might restrict your activities after leaving your employer such as an agreement not to use confidential information, solicit employees of your former employer, or to compete with your employer.

It is also important to note that New Hampshire has a Uniform Trade Secret Act which prohibits use of confidential information and has substantial penalties including, but not limited to an award of attorney's fees and disgorging of profits in addition to damages caused to your former employer by your use of is confidential information. Depending on the circumstances, customer lists with specific contact information may constitute trade secrets within that Act.

It is important to note that while you are an employee of the company, whether or not you have signed agreements, you have a duty of loyalty to this company. In part, this means that you cannot work against your employer's interest to further your future plans to work for a competitor.

For example, it would be inappropriate for you, while still employed, to persuade other employees to come with you to a competitor once your resignation announcement is made.

Likewise, it would be equally inappropriate for you to contact your current employer's customers to let them you that you are going to a competitor and ask that they take their business to the competitor once you leave your current employer. While you remain an employee of that company, you have a duty of loyalty and the courts are far from sympathetic with an employee who breaches such a duty.

Another important issue to consider when you decide to leave your employer is what employment benefits will be affected upon your resignation. Most employers are required to provide continued health insurance under COBRA, however, it is not with an employer match so the price is usually a lot more than you were paying.

If you have vested stock options in a company, most stock option plans substantially shorten the exercisability period of vested stock options upon the resignation of employment. It is not uncommon for worker's vested stock upon resignation to be exercisable only through the last day of his employment.

Therefore, if you plan on exercising your stock options and your stock option plan indicates that once you leave your employment your vested stock options cease to be exercisable, you may want to exercise those options prior to notifying your employer that your are resigning.

Furthermore, if you plan to buy and sell your stock options in a publicly-traded company so as to not have any cash flow concerns, you must also consider whether such a sale would be restricted because of insider trading rules or an overall blackout period that applies to all employee stock options during that time period.

It may be prudent to speak with an attorney in regards to any issues regarding your resignation you have concerns with so as to minimize the potential for an unwelcome surprise.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.