Stop Your Employee From Becoming Your Competitor
You know the routine. You've hired an eager individual willing
to come onboard and learn the business. You've taught them,
trained them, worked hand in hand and side by side for 2 solid
years. Then all of a sudden your employee quits for no apparent
reason.
To your disbelief and utter amazement, you realize that you have
just wasted the last 2 years of your life. A week or so goes by
and you learn that your former employee has started a similar
business and there's nothing you can do to stop them. Or is
there?
The questions start racing through your mind at light speed.
"Why did they just up and quit without notice?" "I thought they
liked working here?" "How come I didn't see this coming?" "What
could I have done differently?" "Could I have been better
prepared for this?"
Then the worst possible thought hits you. "They know all my
clients!" "Which clients of mine are they going after?" "Will my
customers stick with me or go with the new kid on the block?"
Still confused at their abrupt departure from your employ, you
start contacting all of your regular clients. You begin learning
that many of them have already been solicited by your former
employee. Your fears are confirmed and the pain hits you like a
knife in the back.
To add insult to injury the new rates quoted are nearly half
what you charge and your clients are wanting some fast answers
to your much higher fees. Some thinking that you are gouging
them start jumping ship faster than rats on a sinking and
burning ship.
Upon examining your options you discover that it's to late. Now
you're considering that maybe you should have put together that
"Non-Compete"..., "Non-Solicit" ... or "Non-Divulge" contract.
You could of had that individual sign it, before they worked one
minute for you. At least that's what some business owners have
told you they do. In hind sight that solution now seems fair and
reasonable.
Well it's reasonable until you learn that your state, county or
city laws no longer allow such binding contracts. Or local laws
do not prevent such contracts, but the courts find in favor of
your competitor's claims.
Claims that you are preventing them from obtaining gainful
employment, that they have trained for, even if it means they
have become your newest competitor. Not to mention that your
existing clients are not under written contract with you to
remain your clients.
If this has happened to you, understand that you are not alone
in this. You are but one more in the vicious cycle of abuse,
that other businessmen and women have suffered, at the outright
betrayal from their so called "Trusted Employees".
So what's a business owner or manager to do? How do you even the
playing field without violating the law or swaying a court of
law against you? How can you slow down or stop employees from
becoming the competition?
With the possibility of "Non-Compete"..., "Non-Solicit" ... or
"Non-Divulge" contracts being contested, then the alternative
would need to be a contract that cannot be contested in any
court.
To protect your interests and assets there is a legal and
binding way that will not violate either parties employment
rights but provide you legal recourse. Do you want to know what
it is?
Before you move forward with any pre-employment contract
development stop and consider what you as the employer provide
for your hired staff. Items that show your business value has
grown, due to your provisions, but does suffer lose when an
employee quits.
What types of provisions could build value into your business?
Do you provide paid and continued education? Do you provide
tools and equipment? How about a company vehicle? Company phone?
Company Uniforms? Access to client files and data?
All of these items are but part of your company's assets that
you provide and must be well documented that you provide them.
Even the education you provide for your employees, whether
directly through hands on or indirectly such as a company paid
class or seminar. Without these items the employee would be
helpless to perform their needed and required tasks.
So how can you protect these assets from going out the door and
preventing employees from soliciting your clients?
Would you be surprised if I said, "PROMISSORY NOTE". That's
correct. A promise of payment from a promissory note is a legal
binding contract and will stand up in court.
The reason it is binding is that the person signing it agrees to
pay the predetermined maximum amount allowable by law and then
the note is filed at your local courthouse and is on file as a
legal binding debt and is payable on demand to the holder of the
note.
The quickest way to implement this procedure is to go down to
your local office supply store and pick up the notes. Before
hiring any individual, inform them that they are required to
sign a note and must provide their bank account information.
Once information is gathered, file the paperwork at the
courthouse so that you have an official record of the promise to
pay. Inform the employee that if he/she quits and does not
return the company assets entrusted to them you will call in the
note.
Explain that if they quit your employ to start a business and
solicit your existing clients you will take them into court to
collect on the note. Also you will be contacting their bank of
the outstanding note which could put a freeze on their account.
It should give your employees some food for thought. If they do
not return company property they risk going into court and
having the note called in. If they solicit your customers they
risk going into court and having the note called in.
On final point. If the employee wants the note cancelled then
they would be required to pay the maximum allowable amount on
the note to the note holder. But only if the note holder is
willing to cancel the note.
Once paid, the note becomes null and void and is destroyed. It
also allows the employee the freedom to become a competitor
without legal recourse against them from the former note holder.
Make sure to check with a local attorney to determine what
guidelines to follow when implementing a promissory note
agreement. Also check with your local small claims court to
learn what the maximum allowable amount a note can be issued on
an individual. Become familiar with the filing process at your
local courthouse.