Good Honest Dollar $$

Dr. Kai Fu Lee made a highly significant contribution during his seven years of employment with Microsoft, particularly in relation to the company’s operations in China.

His contribution was personally acknowledged by both Steve Ballmer and Bill Gates.

Accordingly, when another technology company offered Lee the opportunity to establish and lead a new research centre in China in 2005, one would have thought that Microsoft would have shown appropriate gratitude and given him their best wishes.

They didn’t – instead, as described by David A. Vise in his book “The Google Story,” they took legal action in an attempt to force him to stay.

The prospective employer was Google, and Microsoft, tired of watching Google poach its best talent, attempted to use the case as a means to tarnish the reputation of its rival.

In 2004, Lee had signed a one year non-compete agreement, which Microsoft claimed prevented him from accepting Google’s offer.

Furthermore, Google, Microsoft said, by making an offer of employment at a time when Lee was bound by the non-compete agreement, was knowingly and improperly attempting to induce Lee to violate the terms of his employment contract with Microsoft.

The case was settled in December 2005 on undisclosed terms, and Lee was free to assume his position at Google.

Nevertheless, the case raised interesting ethical issues relating to situations where employees are under contractual obligation to refrain from accepting alternative offers of employment.

 
Fixed term employment, restrictive clauses and ethics

Today, I would like to commence a three-part mini-series dealing with ethical rights and responsibilities where the following situation occurs:

• A prospective employer wishes to make an offer of employment to a prospective employee;
• The prospective employee concerned is bound to refrain from accepting alternative employment by virtue of his or her current employment contract.

The most common type of situation where this would occur is where the prospective employee is employed under a fixed term employment contract where there are no provisions for early termination. But this could also occur in other types of situations, such the above situation where Mr. Lee was subject to a non-compete clause.

In this mini-series, I would like to examine the ethical rights and responsibilities arising from such situations from the viewpoint of the prospective employer, the prospective employee and the current employer.

Today’s post deals with the prospective employer’s viewpoint. Following posts will deal with the viewpoints of the prospective employee and the current employer.

 
From the viewpoint of the prospective employer

Under one possible viewpoint, prospective employers face an ethical obligation to refrain from making offers of employment in cases where they are aware that acceptance of such an offer would cause the prospective employee to violate the conditions of his or her current employment.

According to this viewpoint, the current employer has every right to expect the employee concerned to fully honor his or her contractual obligations. The prospective employer should respect this, and should refrain from making offers of employment which would in any way entice or encourage the prospective employee to breach such obligations.

I do not agree. To be sure, in such cases, prospective employees themselves may face ethical obligations to decline such offers. But any obligations to honor existing contractual commitments rest with the employee, not the prospective employer.

Prospective employers, in my view, are free from an ethical standpoint, to make offers of employment to any prospective employees who they feel are suitable for the position. This is the case regardless of any outstanding contractual obligations between the prospective employee and the current employer.

In the case above for example, it could reasonably be argued that Dr. Lee was obliged from an ethical standpoint to honor his contractual obligations to Microsoft. Under such an argument, Dr. Lee would have been obliged to reject Google’s offer.

However, Google did not breach any form of ethical protocol in making the offer.

Dr. Lee’s existing contractual obligations were a matter between himself and Microsoft. They were not Google’s problem, nor did they in any way compel Google from an ethical standpoint to refrain from making an offer of employment to a coveted employee.