Use Noncompete Agreements To Help Protect Your Business From

Q: One of my former employees has started a competing business and is calling my clients and trying to steal their business from me. Do I have any legal recourse against him? -- Brad J.

A: I hate to break this to you, Brad, but unless this former employee signed a noncompete agreement while on your payroll, there is probably very little you can do to stop him from wooing your customers. You should discuss the situation with your attorney, but unless this person is also breaking the law in some other way (using stolen trade secrets, for example) your attorney will probably concur with me.

Renegade former employees riding the free enterprise wave is one reason noncompete agreements are gaining in popularity among employers who hope to use them to help protect their business from competitive threats launched by former employees. Many employers are now demanding that key employees sign noncompetes as a stipulation of employment. While signing noncompetes usually doesn't sit well with employees who view them as potential roadblocks to their upwardly mobile career path, many businesses will not hire a key employee without his or her signature on the dotted line.

A noncompete agreement is a formal contract between you and your employees in which they promise not to use information or contacts pertinent to your business in a competing situation. In other words, they agree not to take everything they learn working for you and put it to use for someone else. This could mean going to work for a competitor or starting a competing business of their own.

While not popular with employees, noncompete agreements are a good way for employers to keep key employees on the payroll and protect the company's proprietary information. That said, do not go overboard with noncompetes: not every employee should be required to sign one. If an employee does not have access to sensitive information, customer or accounting data, or is integral to the overall success of your business, there is no need to have them sign a noncompete. The janitor, for example, poses very little threat to your business if he gets a job with a competitor. Your sales manager, on the other hand, can devastate your business by hooking his wagon to a competing horse.

Which employees should sign noncompete agreements? While the prerequisites vary from business to business, the following is a good general list. The term "employees" represents executive level, management, supervisory, and non-management personnel relative to that example:

- Employees involved in research or product development. - Employees involved in the design, fabrication, engineering, and manufacturing process. - Employees who service products made and sold by your company. - Sales and service employees who have regular contact with customers or sensitive customer information. - Employees with access to sensitive business information or trade secrets. - Most importantly, employees who have sufficient information about your business that would allow them to start a competing business.

Most business experts agree that noncompete agreements are generally a good way to protect your business. The downside is that noncompete agreements are often difficult to enforce and in some states, may not be enforceable at all. Many state courts have ruled that noncompete agreements are too restrictive on an employee's right to earn a living.

In California, for instance, noncompetes are generally only enforceable in connection with the sale of a business and not for employees. In Alabama, noncompetes are generally enforceable in only two contexts: the sale of a business and in connection with employment - but even then the enforcement requires that there be a valid interest worthy of protection.

Some states require that the noncompete be signed at the beginning of the employment relationship and will only consider the enforcement of a noncompete signed after the initial employment date if the signing of the noncompete was accompanied by a promotion, raise in pay, or other event that elevated the employee to a more important role within the company.

To be enforceable, noncompete agreements must be reasonable on three accounts: Time, geography and scope. Regarding time, you can't restrict someone from competing with you forever, so one to three years is the accepted time period for most noncompetes.

As to geography, you can enforce restriction in the general area where you conduct business, but you can not enforce the restriction beyond those boundaries. And for scope, the agreement can restrict certain actions on the part of the employee, but can't be so generally restrictive that the employee won't be able to earn a living working in the same industry in a noncompetitive position.

One interesting thing to note: noncompete agreements are not enforceable against certain "professionals," like doctors, CPAs, and lawyers (who do you think writes all those noncompetes).

At this point, Brad, the best thing you can do is contact your attorney to see if you have other grounds for suit, then contact your customers and let them know what's going on.

Explain the situation regarding the former employee, but do so calmly and resist the urge to tell them what you really think of this guy. Showing your anger to the customer is not going to help you keep their business .

Reaffirm your relationship with the client, tell him how much you value his business, remind him of your track record and level of service, then ask one simple question: What can I do to make sure your business stays with me?

Here's to your success!

Tim Knox tim@dropshipwholesale.net For information on starting your own online or eBay business, visit http://www.dropshipwholesale.net


And here is another random article you might be interested in...

Get Paid to Shop And Keep Everything You Buy - Without Having to Pay!

Can You Tell Good Service From Bad; Recognise Value For Money; Compare Prices, Staff Efficiency, Product Range, Customer Service Between Rival Firms?

If so you might easily find work as a Mystery Shopper and be paid to comment on service in shops, banks and building societies, hotels, cinemas, veterinary surgeries, restaurants, even on long distance flights and holidays.

Poor service is the number one reason customers turn their back on a business and start shopping elsewhere. Worse still, one dissatisfied customer tells on average sixteen more people about their experience, meaning even greater loss of customers and profits for business owners.

Even taking too long to answer the telephone or replenish the shelves, inadequate parking facilities, crowded toilets and poor staff-customer relations can alienate customers quickly.

No company can afford to be complacent or fail to check its own operating standards for long.

Companies need to know how they are perceived by customers and if rival firms are setting higher standards and attracting custom from them. Hence the need for regular checks to be made on all aspects of the business from product range and quality of choice, to staff attitudes, customer care, after sales service, and so on.

But theres no easy way for firms to investigate themselves.

Staff who know they are being watched work harder, giving a false impression or, worse still, they consider their employers are spying on them, intent on catching them out and threatening dismissal.

So, mystery shoppers go undetected into a business, seeing things as they really are, through the eyes of people who really matter - customers! What they see and the service they receive will not be affected by who they are and what influence they have over staff!

As one leading mystery shopping agency puts it:

"Mystery shoppers serve as the eyes and ears of clients in retail and service outlets."

As competition grows, especially in a recession, and pressure increases on companies to maintain or better still improve their own market share, more and more openings will appear for mystery shoppers in all areas of commerce, including banks and building societies, shops and supermarkets, hotels and garages, and more.

So a cinema wanting to improve attendance figures might hire regular cinema-goers to view the same film at all local outlets to investigate prices, noise levels, staff efficiency, car parking, toilets and amenities, and so on.

People of all ages can apply to become mystery shoppers, even children with their parents' consent. Special opportunities exist for representatives of particular groups, such as the elderly, disabled, housebound, or of specific ethnic or religious persuasion. You can even be a mystery shopper working entirely by telephone or on the Internet, without ever leaving home and still claim a handsome fee and valuable freebie incentives.

Not All 'Shopping' Involves Buying Something

For example, you might be asked to telephone a company service hotline, posing as a customer with a problem to see how well your case is handled and how long it takes.

The manager of a high street supermarket might commission you to stand outside another firm's store to count the number of customers entering the premises and determine which are the busiest times, what complimentary transport is offered, how many packages are carried out, whether staff help customers to their vehicles, and so on.

Most tasks are simple and quick and involve little more than shopping, making a mental note of the event, and later submitting a written or telephone report to the employing company.

Marguerite Hegley who was instrumental in writing Get Paid to Shop has several years experience as a mystery shopper.

She says:

"I first mystery shopped a supermarket. It was a lot of fun being asked to spend a specific sum of money on goods which I kept, and I also received expenses and a tidy fee for my work.

The pubs were fun too and I was asked to order a meal and a drink in some and just a drink in others. The eight pubs I had to visit over a ten day period were in a twelve mile radius of my home.

I particularly liked working with a chemist chain, checking their photo service and make-up counters. The girl on the make-up counter gave me some good advice about my skin type and a useful range of freebies testers which I am still using three months later. And I got paid of course!"

No Better Time to Become a Mystery Shopper &.. No Better Time to Start Your Own Mystery Shopping Business

The business is pretty new in most countries but catching on fast, and as talk of recession grows opportunities will grow for people to work as mystery shoppers for established hiring companies or even start their own business in this fascinating field.

Avril Harper is the author of Get Paid to Shop and The Ultimate Guide to Starting Your Own Mystery Shopping Business www.castleedenbooks.com

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About Avril Harper

Avril Harper is a UK writer specialising in business opportunities. This article may be freely distributed or used on and off the Internet as long as no changes are made. More articles and free-to-distribute books and reports are available at: www.articlefactory.com
avril@publishingcircles.com