Hiring programmers may be hazardous to your health.

It is not uncommon to consider hiring a contract programmer or consultant who has proven their value by working on one or more projects while in the employ of a vendor. Unfortunately, it is also not uncommon that the hiring may lead to legal problems because of non-compete clauses in the prospective employee's contract with the vendor.

These non-compete clauses may be included in the vendor's contract with the employee, the vendor's contract with your company, or both. When the non-compete clause is part of your contract with the vendor, the employee may not even be aware of its existence. In fact, many employees are not fully familiar with the terms and conditions of their own employment contract, and, thus don't realize that such constraints may exist.

While these contractual restrictions may take many forms, there are often temporal and geographic references, as well as definitions, with varying degrees of clarity, of who is considered the "competition." Contracts may preclude an employee (of a vendor) from taking a position with any existing customer for a specified period of time after employment is terminated. There may be some qualification based upon distance from the current employer's location, such as "...within a fifty mile radius...".

These are examples related to a vendor's contract with its employees. However, there may be clauses in a customer's contract with a vendor precluding the customer from hiring a person who is, or has been in the employ of a vendor, until expiration of a minimum time period after separation from employment.

Since outsourcers and other contract service providers may move employees from customer to customer for specific projects, they may qualify the prohibitions from employment by the customer to only those employees who have worked on projects for that customer.

A problem that may occur related to this qualification is that customers may not know all the vendor's employees that have worked on their projects, and a vendor's employee may not know the customers on whose projects they have worked. For example, programmers may be writing code for routines or functions at the vendor's offices based on specifications that do not explicitly or implicitly identify the customer(s). There clearly are potential liabilities to the employee who knowingly violates the terms of a contractual non-compete clause by accepting employment from a competitor or customer of the employer with whom they had such a contractual agreement.

Liability may also exist for a company that knowingly employs someone under conditions where such employment is prohibited based upon that person's contractual obligations to the vendor. However, severe consequences may also result if neither the employee nor the contracting customer are aware that such clauses may be in effect.