My Operations Manager Quit & Is Taking Clients with Him—What Can I Do?
Owning a business requires having a quality work force that is experienced, trustworthy, and dedicated to your clients. But one of the most difficult tasks for a business owner is finding the right person to oversee those employees. When interviewing for this managerial position, business owners look for someone with the skills and qualifications of a leader: charismatic, communicative, and capable of effectively motivating and managing others.
The problem when interviewing for this person is that their skill set makes them in high demand and often capable of starting their own business. What if a year after hiring your model supervisor, he decides to start a competing business? And what if, on the day he gives his notice he decides to email a copy of your business’s client list to his personal email so he can solicit these clients in the future? What can you do to stop him and, more importantly, what could you have done to prevent him from doing this in the first place?
We understand that you want to protect your business and its confidential information. Although it is always important to have a positive outlook, you must prepare for the possibility that your key employees may leave your organization – and consider how you will protect your business, your client base, and your trade secrets upon their departure.
Former employees are prohibited by law from taking “trade secret information” when they leave a company. Generally speaking, a “trade secret” is a business’s information or property that is not generally known to the public, valuable to the business, and that the business has made reasonable efforts to keep confidential. These factors, however, leave plenty open to interpretation; this uncertainty could lead to an employee taking information that he might think is not a trade secret but you, as the business owner, does. This, in turn, can lead to costly litigation.
In order to avoid this uncertainty, it is critical for a business to have clear and enforceable agreements with its principal supervisors and employees that clearly define what information is considered the company’s “trade secrets.” The agreement should clearly provide what an employee can – and more importantly cannot – do with this proprietary information if they leave your business to join a competitor or start their own company. Your agreement also should detail what remedies your business will have if an employee violates these covenants and attempts to use your company’s valuable and confidential information.
While a business owner might desire to consider every aspect of the business as a “trade secret,” this also can be problematic. Courts routinely hold that former employees have the right to compete, and your clients (or ex-clients) are free to choose to whom they wish to do business. Agreements restricting this freedom are likely to be challenged as violating public policy. It is important, therefore, that your agreements not attempt to overreach, as doing so will risk the agreement being deemed invalid.
An experienced business attorney can help you navigate and balance these complex legal matters by drafting clear and fair agreements that protect your company’s most critical information, while preventing headaches that could otherwise present themselves later.