Posted on May 14th, 2019
Below is a full transcript of this video.
How’s it going fellow entrepreneurs?
Its John Fagerholm again from Metal Law Group, and today I want to talk about a message I get from quite a few employers.
It’s basically just asking can former employees start their own business, compete with me and steal my clients?
Well that’s a very broad question, and the answer is, it depends. So let me try to unpack all of that.
First of all, non-competes are not favored in California so anything that prevents a former employee from competing with you is probably not enforceable.
If they’re getting clients that are accessible to anybody, just because they were your former employees doesn’t mean that they can’t do that. So they can start their own competing business and go after all of your clients.
However, if your client list is confidential information, meaning either you have a confidentiality agreement which is probably the best thing, indicating hey these things are confidential and they’re not out in the public. Then yeah, probably enforceable.
Also, even if you don’t have a writing, it may be enforceable if it’s confidential information. For example, I had a pool company call me and they basically acquired a bunch of smaller pool companies.
They had a problem with an employee, the employee who had a route quit, and then went back and started trying to start his own business and grab all of those customers on that route.
Now that may fall into confidential information simply because they actually paid for those routes, they paid for those lists, and then they closed those customers, and this former employee wouldn’t even know about these customers except for the information he had from working with the employer.
That’s the only reason why he knew these people and knew how to contact them.
Now, if he was just some guy randomly knocking on doors and saying, “Hey do you want me to clean your pool? I can do it for a better price than your pool company.” There’s no problem with that.
That’s why this is kind of a vague question, hence a vague answer. But that’s probably the best you’re gonna get out of me without giving me very clear, specific questions.
Thanks everybody, until next time.
