Legal Question in Business Law in California

Employers tend to threaten a lot, over various acts and practices of their ex-employees, and to sue less often. So, just because you get a threat doesn't mean a suit will follow, and even if sued, you may win rather than lose, or the suit may get settled favorably to you.

Nevertheless, since suits are expensive to defend and time-consuming, and no one likes even the threat of suit, here are some tips on things that are OK and things to avoid that are particularly dangerous.

First, California law and policy encourages competition and this includes new competing start-ups by former employees. You can't be sued successfully for merely starting a competing business. Further, any contract that attempts to restrict a person's right to engage in any lawful business, trade or profession is void to the extent of the restriction.

However, California and most other states also recognize that the "trade secrets" of a business are valuable private property and must not be misappropriated by a departing or departed employee. The identities and other information about customers and prospective customers can be, and often is, a trade secret. I often say, you can quit and start a competing business, but you can't grab the sales manager's Rolodex on your way out.

Whether customer information is a trade secret or not depends upon (among other things) how it was gathered, and how it was protected after being gathered by the employer. Names of prospective customers obtained from a phone book, simple on-line searches, trade directories, etc. will probably not be protected secret information, and you'd be free to make sales pitches to them. However, you could be sued for misappropriation of trade secrets if you started calling on customers whose need for a particular product or service was developed by the former employer through the efforts of its sales team.

As for buying the same equipment, do you mean for use in your business or for resale? Again, I think the answer is whether the source of the equipment, or its uses in the business, was a secret. Usually, there wouldn't be any secrets, but it's possible the former employer has found a way to make a particular machine more efficient that might be its trade secret.