When an Employee Leaves and Tries to Poach Clients and Other Employees

In business, those who were once your greatest allies can become your worst enemies. Key employees are often placed in positions of trust and confidence: they know your business, they know your customers, and they know other key employees.  This insider knowledge is dangerous if the employee is fired or quits and decides to use that knowledge to unfairly compete with their former employer.  Understanding how to prevent an exodus of clients or other employees at the hands of a former worker can prevent large losses.

In North Carolina, the protection of customer relations against misappropriation by a departing employee is well recognized as a legitimate interest of an employer. But often employers take no proactive steps to protect against misappropriation until after the departing employee has caused the damage – OR_ the employer does not realize the restrictions in their employment agreements are ineffective or unenforceable until after the key employee departs.  Employers can (and should!) take steps to reduce the risks of departing employees by having current employees and new hires sign employment agreements that contain certain “restrictive covenants” that prohibit:

  • the employee from disclosing or using the Company’s confidential information and trade secrets (including, client contact information, pricing or other confidential bid information);
  • soliciting the Company’s employees, vendors or customers to leave the employer (or cease doing business with the employer) (non-solicitation agreement); and/or
  • the employee, from competing with the employer for a limited period of time within a certain geographic area (non-compete).

An employment agreement that contains terms addressing, confidentiality, non-disclosure, non-competition, and non-solicitation is a legal contract that employers can have their employees sign either (1) at the start of employment, or (2) after employment has commenced (subject to certain additional requirements).  This type of employment agreement can be used with an “at-will employee,” who can still be fired “at-will” without cause at any time. A properly drafted employment agreement defines an employee’s scope of work, and job responsibilities, and restricts what the employee can do upon the termination of employment to solicit Company clients or employees, or otherwise compete with the prior employer.

Every Company’s business is different.  No  fill-in-the-blank form (especially those found for free on the internet) will properly address each employer’s specific needs and business.   Employers must be careful when drafting this type of agreement as the slightest mistake or drafting error may cause the agreement to be unenforceable.  Each state has different requirements and will enforce these types of agreements differently.

At Skufca Law, we counsel our clients as to how the law applies to the enforcement of restrictive covenants in employment agreements, and we draft agreements for our clients  that are tailored to fit their unique needs.   Having an employment agreement in place will protect your Company’s legitimate business interest in preserving your clients and retaining key employees.

The Business Law attorneys at Skufca Law are experienced in reviewing and drafting employment agreements that protect employers. To schedule a consultation focused on answering your questions about employment agreements, contact the business law attorneys at Skufca Law at (704) 376-3030