In November of 2002, Frank Cumbo and 10 colleagues left a New York temporary-staffing agency to start a competing business. Two months later, their former employer sued all 11 for unfairly attempting to solicit business from its clients.

Mr. Cumbo, who is now chief executive of Lerner, Cumbo & Associates Inc., in New York, argues that he and the others started from scratch to build the new agency and that no confidential information was taken from their former employer, Essex Temporary Services Inc. "I can pick up the phone book and get the same information," says Mr. Cumbo. "I didn't take anything with me, nor did the people who left with me."

Richard Treistman, president of Essex, declined to comment on the case. A second lawsuit was filed this year against six employees who left Essex in March to work for Mr. Cumbo's agency. Both cases are pending in New York State Supreme Court.

Figuring out what qualifies as fair or unfair competition is often one of the stickiest areas of employment law. But one thing is clear: Disputes about the issue are all too common when employees leave to join, or become, a competitor.

In recent years, more companies have tried to use so-called noncompete agreements to keep employees from turning into rivals. The pacts typically restrict an employee's ability to get a new job at a competing company within a certain geographic radius or period of time. As information vital to running a business becomes more widely available across companies, more employers are also requiring less-senior staffers to sign such documents, experts say. Companies bring suit even when no noncompete agreements have been signed; for example, Mr. Cumbo and most of his 10 colleagues never signed such a pact.

A March survey by the Society for Human Resource Management in Alexandria, Va., found that 30% of companies currently require employees to sign noncompete agreements. The survey also found that 51% of companies require employees to sign nondisclosure agreements, which typically bar employees from passing along proprietary information during and after employment at a company.

The first step in navigating such agreements is being sure you understand exactly what they say before you sign one. In addition to noncompete and nondisclosure agreements, the most common types of such covenants include nonsolicitation agreements, whereby employees are barred from soliciting either the employees or customers of a former employer. "Every contract is different," says Jennifer Rubin, an employment lawyer in New York. "The bottom line is certainly to read very carefully any agreements that are presented."

As a general rule, if you are preparing to leave your job to work for another company, you should make any preparations, including writing up business plans, off the clock and away from the office. You should also avoid doing anything that could be construed as actively competing with your employer, such as calling prospective customers, until after you leave your company. Any paperwork or other information that an employee takes from a company is potential fodder for litigation, say experts.

Electronic-monitoring technology is also making it easier for companies to track employee behavior that might violate a noncompete agreement, says Ms. Rubin. Today, even performing minor tasks, such as drafting a resume, on a company computer could bolster a charge of violating a noncompete agreement. "Information can be gleaned from those data points that can be useful in bringing a claim against an employee," says Ms. Rubin.

Can you get out of a noncompete agreement once you've signed one? While each situation is unique, some experts say there are often ways to elude certain agreements. In some cases, workers can show that they haven't worked at a company long enough for a noncompete to be enforceable, and states enforce such agreements to varying degrees, according to Carl Khalil, a lawyer who runs www.breakyournoncompete.com. He recommends trying to negotiate with an employer prior to signing an agreement, if you feel an agreement is too onerous. Most noncompete pacts are presented for signing during the hiring process.

Whether you are bound by a noncompete agreement or not, it is wise to leave on a good note whenever possible. Since most industries are so highly networked today, ill will at your former employer can easily spread and tarnish an otherwise positive reputation. In some cases, a company will want you to provide limited information to clients about your departure, or even introduce your successor.

Following the wishes of your employer could help ensure that you aren't pursued down the road by a lawsuit motivated by enmity. In some cases, of course, there is no way for you to prevent a conflict surrounding noncompete issues.

In any case, you should find out what your company's policy is regarding providing information about your departure and follow it, says Kevin Cuthbert, a principal of Capital H Group, a human-resources consulting firm in Chicago. "It's just another part of ensuring a smooth transition," he says. "Why leave that bad taste in anyone's mouth if you don't have to?"