Dear Dave-On Laws of Business

[Creature]

Dear Dave:

I don't know how much you know about business laws, but here it goes.

Say I work for company X. What are the penalties for opening a business in competition with/producing the same products as company X WHILE still employed at company X (behind boss's back)? Is this illegal? If so, what are the possible consequences? A non-competition clause was not signed upon employment, BUT warning was given that it was a conflict of interests and I could not be employed at company X while working in competition. I still opened the business behind the boss's back, boss found out, I got terminated.

I ask because I know someone that had an employee do this. I was just curious as to whether or not he really has a case against the employee. He believes the employee was secretly directing customers away from him. Also, it is believed that some software/artwork/intellectual property theft has occurred.

Actually, if anyone is knowledgeable in law, feel free to help!

Thanks

xoxo creature

 

[Dave]

Dear Creature,

Unless the worker has signed a non-compete clause, is using company X time or is actively sabotaging company X's product it is not illegal even as it's totally immoral. As a boss I'd fire someone doing it as it is that conflict of interest thing of which you spoke.

One thing that jumps out at me is your asking if the employer has a case. I'm not sure what you mean by that. If something was stolen then the employee is probably in trouble and the new business can be sued. So if your friend (or you) did not set this up as either an LLC or corporation they (or you) might just regret your actions.

 

[Creature]

Haha it really is someone else I know. There has been so much drama surrounding this situation, and I've left many details out. It's just causing him so much anxiety, and I hate seeing him go through this when he is a good person. His former employee is so mad about being fired, and is stooping to really trashy levels to try to get him shut down. None of it is working because he isn't doing anything wrong, but still. I guess I've just been trying to think of ways to help him with anything. I wish there was something I could do

 

[Dave]

So your friend is the boss, then? Ah! In that case the situation is a bit more bearable.

If the former employee has products or services which are proven to have been stolen or copied from you friend's business, I would tell him to sue. Not the former employee, but the business he founded. Get a cease and desist order to stop them from continuing business. The dude did a bad thing and should be made to pay the price.

 

[Creature]

I think so too, Dave. It's a really messed up situation. My friend is the owner and boss. Sorry if all of that was unclear before. I've just been very selective about the information that I divulge over the web, just in case the small chance someone stumbles upon my posts about it.

I just hope there is something he can do. I would think there would be some sort of law against, say, secretly opening a donut shop while still under the employment of Krispy Kreme with access to all of Krispy Kreme's customers, financial information, and recipes.

---------- Post added at 09:25 PM ---------- Previous post was at 09:24 PM ----------

Annnndddd on that note, now I want a donut.

 

[strawman]

If the worker is a salaried white collar worker/professional, then in many (most?) states their work product is anything they think of that is business related even if it's not on company time.

Only if the employee was a contract worker, or paid hourly do they have protection against suits a business might bring against them regarding competitive practices. And even in these cases it can be hard to prove that the employee is not liable for damages to the business.

Either way, if this is causing your friend anxiety, have him consult with a lawyer. Sure, it'll be expensive, but right now he's not paying a paycheck he normally has to cover, and if it brings closure to the issue then it's money well spent.

Tell him good luck, and don't sweat it. Firing an employee for causing business loss or creating competition is perfectly legit, and even if it weren't, it's Right to Work - he can be fired for any reason, or no reason at all.

 

[HCGLNS]

If the employee was using any knowledge gained through employment with his original company to actually compete against that company he is in serious trouble. This could range from intellectual property to clientelle to perceived value.

 

[Creature]

If the employee was using any knowledge gained through employment with his original company to actually compete against that company he is in serious trouble. This could range from intellectual property to clientelle to perceived value.

This is exactly what allegedly happened. The former employee redirected a customer to his secret business while employed with my friend. Literally, a customer called and the employee said that my friend no longer made the product, and thus, sent the customer to his (the former employee's) business. It has also been alleged that the employee, after termination, contacted a different customer saying that my friend no longer made a certain product. That customer actually contacted my friend to see if the statement was true.

 

[strawman]

If the employee was using any knowledge gained through employment with his original company to actually compete against that company he is in serious trouble. This could range from intellectual property to clientelle to perceived value.

This is exactly what allegedly happened. The former employee redirected a customer to his secret business while employed with my friend. Literally, a customer called and the employee said that my friend no longer made the product, and thus, sent the customer to his (the former employee's) business. It has also been alleged that the employee, after termination, contacted a different customer saying that my friend no longer made a certain product. That customer actually contacted my friend to see if the statement was true.[/QUOTE]

Oh. In that case I'd get a lawyer and pile drive the prior employee into the ground, especially if they are still doing things to hurt the business. Some people need a good knock upside the head.

If not, he's just going to do the same thing to some other business later on - he obviously doesn't think that what he did was wrong and blatantly illegal.