Non-Compete Agreements for Key Staff Members

Your key salesperson leaves and goes to work for your biggest competitor!

With your salesperson goes trade secrets, client lists, advertising and marketing plans, lead sources and referrers, financial data, operational systems, recipes, internal practices, key clients, and venue relationships. That’s a huge loss, even for a small company. For larger firms with more than one salesperson, the losses can even be greater.

Catering firms have gone out of business because of something like this. Others suffer severe financial hardships until they can get back on their feet again and others suffer some loss, but they recover quickly.

With a simple one-page agreement you can protect yourself and your firm. It’s called a Protection of Trade Secrets and Confidential Information Form. This form can be found in a variety of formats by simply searching on Google.

The main components of this form include that during employment and for a one, two or three-year* period upon termination of employment for any cause, employee cannot:

• Disclose trade secrets and confidential information to competitors

• Work for a competitor

• Solicit or initiate contact with any company clients, venues, or lead sources for his own benefit or for the benefit of any competing business

• Publish, use, disclose, or authorize anyone else to publish, disclose, or use any secret or confidential information relating to the business or operations of the company, its clients, venues and vendors.

• Offer employment to any employees of the company

• Disparage the company or any of its employees in any way to a third party.

*Agreements are commonly for one, two, or three years in length. One of my competitors has a three-year agreement, while my agreement is two years.

The legalities
So what happens if an employee leaves and violates this agreement? Good question. The employer is entitled to any and all available remedies as determined by a court of competent jurisdiction, including but not limited to: (a) Injunctive relief without having to prove actual damage to the company, (b) actual, liquidated compensatory and/or punitive damages, (c) attorney’s fees.

I am quite confident that most readers already do this, but I am also sure some of you do not have a form like this. If you do—great—but double-check to ensure that your key staff members all have signed a copy. It’s easy to overlook things in the heat of the battle during the holiday season.

If you are an owner and do not use this form, you should. If you are an employee and wonder why you have to sign one, first of all it’s a condition of employment by many employers, and secondly, know that your employer has worked long and hard to build up a business to take care of his/her other employees and their families and his/her own family. Owners need to protect their income.

Get Fresh, January 2016