non-compete agreements for employee, subcontractors, potential buyers, sellers September 28, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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non-compete agreements for employee, subcontractors, potential buyers, sellers
September 28, 2018
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non-compete agreements for employee, subcontractors, potential buyers, sellers
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Ken,
    I enjoy ready your emails!
    Recently I let go an independent contractor that worked with me for 8 years (behavior  issues), he signed non-compete and non-disclosure (the forms are not from you, as I didn't know you back then).
I found out that he is now working for a direct competitor, calling on my customers and sent competitors to offer a job to my secretary.
    What are my options?  Can you send a warning letter to him and his new employer?
Please, if published,
name withheld 
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Response
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    The "warning letter" should be to you, and you did get it many times when reading articles on this forum.  There must be something in the air or water, because all of a sudden I am getting calls and emails like yours every week.
    Restricting someone from competing with you is not easy; in fact it's tricky and often legally technical.  One shoe won't feet every foot.  And, while the language or contract terminology can be crafted and drafted to meet all of the legal issues, particularly facts unique to the relationship will be germane to enforcement.
    A call the other day was that an ex-employee was stealing accounts.  Client said the ex had signed a "non-disclosure agreement".  My immediate thought was, well that's appropriate for someone looking to buy your business, someone looking over your business records, not an employee who you want to restrict.  
    The above ex-employee signed a "non-compete and non-disclosure" form; not a Kirschenbaum TM contract, as you point out.  Since it's not mine, I have no idea what it states.  It could be enforceable but too costly to enforce.
    Employees and subcontractors can be restricted from retaining or disclosing information, data and documents that the employer treats as confidential and proprietary.  Public information is not subject to restriction.  So employees and subcontractors should not retain customer lists, pricing, written policies and procedures, other employee information, etc; information that someone from the general public would not have.  
    Restriction on competition is, however, another matter.  Generally, anti-competition agreements will be enforced only to the extent necessary to protect the rights of the employer [or a buyer in the case of a sale] and so as not to prevent the restricted party from earning a livelihood.  There will be a balancing of rights between the party looking to enforce the restriction and the restricted party.  Often the analysis is subtle, trying to carve out territory or fashion a time period.  If the restriction is overly broad, unnecessary from the employer's perspective, and unduly harsh to the restricted party, then the agreement won't be enforced.
    We cover non-disclosure and non-compete in our Standard Form Agreements.  Here is where you find them:
  *  Employees are covered by the Employment Agreement and Employee Handbook
  *  Subcontractors are covered by the subcontract agreement
  *  Potential buyers and those looking at your business records are covered by the NDA, non disclosure agreement
  *  Sellers are covered by the Asset Purchase Agreement [or stock purchase agr]
  *  Subscribers are restricted from hiring your employees in our Standard Form All in One agreements
    Each of these agreements have an Arbitration Provision so we can commence proceedings almost immediately once you ask us to intervene and handle your issue.  When you use our Standard Form Agreements we already know what the terminology is, and we already know what steps we need to take to commence proceedings.  I don't really know how better to encourage you to get and use our Standard Form Agreements and engage our professional services when you need them.
    For collections, contact Kathleen Lampert KLampert@Kirschenbaumesq.com, 516 747 6700 x 319or Ella Reynolds at EReynolds@KirschenbaumEsq.com or 516 747 6700 x 321.
    For assistance with contract selection, contract our Contract Administrator Eileen Wagda at EWadga@Kirschenbaumesq.com or 516 747 6700 x 312.
    For Mergers and Acquisitions, contract Jennifer Kirschenbaum,Esq., Jen@Kirschenbaumesq.com or 516 747 6700 x 302.
    For disputes, contact me [contact info below] or contact Eileen Wagda 516 747 6700 x 312
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com