How to Keep an Ex-Employee From Stealing Customers

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When a former employee approaches your customers to try to win their business, it generates bad feelings at a minimum and can also affect you financially. Whether you can do anything about this -- and what you can do -- depends on several things, including the existence of a nonsolicitation clause in the former employee's contract.

Nonsolicitation Clauses

Your best defense against a former employee who solicits your customers is the nonsolicitation clause you had the employee sign as a condition of employment. This can be part of a larger employment agreement, or it can be a stand-alone agreement in which the employee agrees not to solicit your customers for some period after leaving your employment. The agreement should list all potential customers she might approach and note that the prohibition includes any new customers the business acquires during the employee's time with your company.

Limitations of Nonsolicitation Agreements

Noncompetition agreements lack the clear boundaries of other kinds of legal agreements. Even if your employee signs such an agreement, enforcing it can be problematic. It's usual, for example, for a salesperson who moves to another firm to announce that move to former customers. What else is on that announcement may determine whether it violates the nonsolicitation agreement. As attorney Matt Dickstein points out, a former employee's simple announcement about his new place of employment almost certainly does not violate an enforceable nonsolicitation agreement. If the announcement becomes more elaborate, however, and begins to resemble a sales pitch, it threatens to become an action in violation of the agreement.

The Meaning of "Steal"

Two more elements that contribute to the enforceability of a nonsolicitation agreement are what the former employee is taking and how she acquired it. If, for example, you had a private customer list that circulates among your employees but is clearly marked "Confidential: Do not share," this makes the list more like a trade secret and makes its use by the former employee more likely to be in violation. If the list is some sort of master list that no one employee is allowed to see -- employees, for example, may only see the employee list for their own region or department -- then soliciting widely from that list is more clearly in violation of the agreement.

Fairness

In the absence of a signed nonsolicitation agreement, your ability to do anything about an employee soliciting your customers is limited. One remaining area where you may have a case is within the general common-law understanding of fairness. If, for example, a vengeful former employee is trying to steal your customers to harm you and you can prove that, you may have a case. But this is a long reach; absent a nonsolicitation agreement, your ex-employee probably has a legal right to solicit your customers. Unless he deliberately harms your company -- by destroying or stealing company records, for example -- there's not much you can do.

References

About the Author

Patrick Gleeson received a doctorate in 18th century English literature at the University of Washington. He served as a professor of English at the University of Victoria and was head of freshman English at San Francisco State University. Gleeson is the director of technical publications for McClarie Group and manages an investment fund. He is a Registered Investment Advisor.

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