Legal Question in Business Law in California

Re: Leaving a job/contacting clients

Generally speaking, in California, unless an employee is an equity holder (i.e. owner) or an extremely top level/key employee who has been given consideration for executing the non-compete, the non-compete is not enforceable. The courts generally view non-competes as illegal restraints on trade.

While you are generally free to let your clients know that you are moving on, to actively solicit them may subject to you liability. This would not be based upon the non-compete, but rather, upon your knowledge of company trade secrets. For example, if the customer list is a highly guarded secret, you could be liable for disclosing its contents. These are all big "IFs" because again, in general, there is nothing stopping you from competing against your former employer.

You should have a qualified attorney review the relevant underlying documents and advise you accordingly. Good luck.

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Re: Leaving a job/contacting clients

I read the other response on this question, and it is a bit general. The non-compete you have described may be enforceable if it is deemed to be reasonable in terms of duration, geographical, restraints, and other criteria. Typically they are found to be unenforceable, but some are enforceable -- I can't tell, because I haven't see the agreement.

I would be careful in how you handle the situation. The law is very specific on this point. You may inform your former employer's clients that you are changing employment, but that is it. Simply contacting them raises the spectre of impropriety and be managed by a professional attorney. Usually, the letter going out to these former clients is the only communication and in this context should be drafted by an attorney. I would be happy to review your non-compete and draft the letter for a low rate.

Re: Leaving a job/contacting clients

Non-compete clauses may be enforceable with limitations. You need specific advice on what you and can't do to let your customer base know where you are now, based upon your specific contracts and the applicable law. If done correctly, it won't trigger a 'valid' lawsuit. Contact me if interested in doing this right.

Re: Leaving a job/contacting clients

This is a classic dilemma all sales-based employees face. We've dealt with these issues in many contexts, both as to employees branching off to form their own businesses to sales personnel such as yourself.

First, I assume that you are not a partner or owner of your past employer. With certain limited exceptions (ownership of a business being one of them), non-compete provisions are unenforceable in California. Make sure, however, that your non-compete is not also a non-disclosure agreement. If it is, then to the extent that the agreement prohibits you from utilizing or disclosing confidential information, it is fully enforceable.

As to whether you can inform your customers that you are with a new company, the question is whether you will be utilizing a customer list obtained as a result of your employment with your previous employer. The caselaw on this subject has essentially progressed on a case by case basis, but certain basic principles exist. Most importantly is whether the client list you are using is something that could only have been developed using information that you obtained while working with your previous employer. If this is the case then your use of the list is more likely to be both an unfair trade pratice and a violation of trade secret laws. Obviously, if you simply use the client list that was given to you by your employer to solicit business at your new job, the pendulum swings against you. However, several cases have held that where a person merely contacted customers with whom he had a personal relationship, or whose business he had developed while working with the previous employer, such a contact does not violate trade secret or unfair trade practice laws.

Of course, to really assess where you are likely to fit into the pendulum I described above, I would need to know more about your matter. I would be happy to discuss this issue further with you if you wish.

Re: Leaving a job/contacting clients

I've looked at all five previous answers, which give conflicting views, and I'll give you my opinion and then a couple of references.

Mr. Guerrini - accurate

Mr. Brainard - wrong

Mr. Nelson - wrong

Mr. Gee - a bit rambling, but accurate

Mr. Fernandez - raises a side issue.

I suggest you look at a couple of statutes. The first is Business & Professions Code 16600 to 16602. 16600 declares that contracts restraining anyone from engaging in a lawful business, trade or profession are, to the extent of the restraint, void; 16601 and 16602 go on to create two important exceptions which are almost certainly inapplicable to you -- sale of the goodwill of a business, and disassociation of a partner or major shareholder -- where restraints on competition MAY be permissible.

The second relevant statute is the Uniform Trade Secrets Act (UTSA), found at Civil Code sections 3426 to 3426.11. The UTSA is a pretty broad-scope law, covering trade secrets of all types, but of concern to you is that some things you might "pick up" - figuratively or literally - from a former employer aren't yours to take and use in your new, competing, occupation. This includes things "removed" from sensitive files, the boss's Rolodex, etc., and probably most stuff you were told, or should have known, was sensitive, confidential material. Read the definition of a trade secret in the Code, and avoid using anything that might meet the definition.

To be more specific, courts have generally ruled that an ex-salesman can notify his former clients that he has left, and is either working for himself or for a competitor. Further, it is generally permissible to accpet their business if they decide to follow you. Where things get dicey is when you begin to utilize customer-specific information you developed while at the old job, such as the Purchasing Manager's favorite Scotch, the fact that they always buy on Tuesday but throw out salesmen who show up on Friday, and that kind of thing -- these can be trade secrets of the former employer.

Finally, I should point out that this whole area is often the subject of threatening letters and lawsuits without much chance of winning, but calculated to bring about a settlement in favor of the former employer. So, maybe the question you need to ask yourself for strategic purposes is, "Do I want to risk being sued and having to defend, even if I'm 99% likely to win?" On that point, I have no advice to offer, but I'd guess that resisting intimidation usually pays off.

Re: Leaving a job/contacting clients

There is something above and beyond what the other lawyers here have discussed. That is the tort of "tortious interference with contractual relations."

Notwithstanding the non-competition clause; if you intentionally interfere with known contractual relationships that your current employer has with their client's, you can be sued seperatly under this tort. I know, I have prosecuted and a obtained stipulated judgement in a case with a similiar fact pattern.

I would be happy to give you a consultation with regards to this matter. For a fee, I could review the contract that you have with your present employer and provide a a legal opinion as to what would be acceptible under the circumstances. If you are interested, contact me through this system.