I don't know how many hundreds of founders I have worked with over the years in Silicon Valley who began by moonlighting while working day jobs to get started.
The process is normally pretty safe and, out of the hundreds of cases, I don't know of one that resulted in a lawsuit.
On the other hand, since I also do litigation, I have witnessed a variety of these situations that have resulted in lawsuits and have occasionally defended them.
What is the difference between the safe and the unsafe ones? The standard safe zone is well-known in the Valley: do the side activity strictly on your own time and without using company resources.
Where people trip up:
1. Doing side activity that is related to the employer's current or anticipated business.
2. Failing to comply not so much with the terms of an employment agreement but rather with "company policies" that large employers will periodically require their employees to sign - policies that can require the employee to report all side activity and to sign a form affirmatively attesting either that there is none or explaining what it is. (If you lie on this, you get in trouble).
3. Crossing the line in violating fiduciary obligations that an employee has to ensure that all activity for which the employee is compensated is done strictly for the benefit of the employer.
The really critical area tends to be the last point. I don't know how many times over the years that I have seen founders get tempted to want to: (i) steer current customers of their employer in the direction of their side venture; (ii) sign up key customer or supplier contacts of their employer as "advisors" for their side venture; (iii) talk to co-employees about joining their side venture; and (iv) the worst temptation of all (but thankfully rarely done) use an inside contact at their employer's business (or use their own position) to steer project work toward the side venture.
The simple rule is to play it straight. Avoid conflicts. Make sure any IP you generate in your side venture has no material connection with your employer's business. And then follow the standard rules (own time, own resources). If you do these things, you will normally not incur any significant risk from moonlighting. (Of course, check with a good lawyer in your local area on details for your particular situation).
It also depends on where you are located. Silicon Valley is a special case and California has laws that are more favorable to employees and the individual. Places like New York Texas do not, and you have to be much more careful.
The really critical area tends to be the last point. I don't know how many times over the years that I have seen founders get tempted to want to: (i) steer current customers of their employer in the direction of their side venture; (ii) sign up key customer or supplier contacts of their employer as "advisors" for their side venture; (iii) talk to co-employees about joining their side venture; and (iv) the worst temptation of all (but thankfully rarely done) use an inside contact at their employer's business (or use their own position) to steer project work toward the side venture.
On 3, does this mean you can be successfully sued for hiring a co-worker? What if it's 2 years later?
On a side note, it's pretty damned fascist that relationships can be treated as corporate property. That only passes because the corporations now own the legal system.
+1 on "taking you to court is enough to kill." And you personally -- even if you win you don't get your lawyer fees back (contrary to popular opinion).
Nonsolicit is actually one of the clauses I think isn't unfair. It's one thing to leave a company, quite another to cause an exodus.
I think nonsolicit is quite unfair. You can't force any of your co-workers to leave with you, and if they're happy where they are most of them won't. If the company sucks, a Good Friend would try to take as many with him as possible when he found something better. That's just people helping other people out of crappy situations.
I've heard some people espouse the idea that there might be some ethical misconduct in courting [soon-to-be] ex-co-workers. I don't see any basis for that belief. Again, the most you can do is make an offer; if your company's staff is all going to jump ship when someone comes to them with vague and shakey musings about founding a startup together, that should really tell you something about the company you work for. There's nothing wrong with making a proposition, imo.
I have worked with people who have signed oppressive contracts. I find it deeply sad that some people have done that. Neither of my co-workers from my last job would be available if I wanted to proposition them, as they are both engaged in multi-year contracts which state departure before Month Year is punishable by big, big financial penalties. Only for the employee, of course; the employer can terminate them at its leisure without any responsibility according to these documents.
Nonsolicit is ridiculous. I would never push an employment offer on a friend, but what's wrong with making the offer and allowing him to decide what's in his best interests?
You're not "causing an exodus" if 5 people independently decide to join your presumably riskier venture. If they're treated well, that's not going to happen until you have serious traction.
The process is normally pretty safe and, out of the hundreds of cases, I don't know of one that resulted in a lawsuit.
On the other hand, since I also do litigation, I have witnessed a variety of these situations that have resulted in lawsuits and have occasionally defended them.
What is the difference between the safe and the unsafe ones? The standard safe zone is well-known in the Valley: do the side activity strictly on your own time and without using company resources.
Where people trip up:
1. Doing side activity that is related to the employer's current or anticipated business.
2. Failing to comply not so much with the terms of an employment agreement but rather with "company policies" that large employers will periodically require their employees to sign - policies that can require the employee to report all side activity and to sign a form affirmatively attesting either that there is none or explaining what it is. (If you lie on this, you get in trouble).
3. Crossing the line in violating fiduciary obligations that an employee has to ensure that all activity for which the employee is compensated is done strictly for the benefit of the employer.
The really critical area tends to be the last point. I don't know how many times over the years that I have seen founders get tempted to want to: (i) steer current customers of their employer in the direction of their side venture; (ii) sign up key customer or supplier contacts of their employer as "advisors" for their side venture; (iii) talk to co-employees about joining their side venture; and (iv) the worst temptation of all (but thankfully rarely done) use an inside contact at their employer's business (or use their own position) to steer project work toward the side venture.
The simple rule is to play it straight. Avoid conflicts. Make sure any IP you generate in your side venture has no material connection with your employer's business. And then follow the standard rules (own time, own resources). If you do these things, you will normally not incur any significant risk from moonlighting. (Of course, check with a good lawyer in your local area on details for your particular situation).