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Can we legally stop a former employee from soliciting our customers?

Can we legally stop a former employee from soliciting our customers?

Full question:

We have an established computer retail and consulting business and one of our employees has quit and started his own business by soliciting and taking some of our customers as well as making false statements about us to them. Is there any legal remedy to stop him?

Category: Employment
Subcategory: NonCompete Agreement
Date: 04/07/2025
State: Oregon

Answer:

The legal options available depend on the specific circumstances, including whether the employee had an employment contract containing non-compete or non-solicitation clauses. Such agreements can help protect trade secrets, customer lists, and other confidential information.

If the employee signed a non-compete or non-solicitation agreement, a court may enforce it if it is reasonable in scope, duration, and geography. The employer must demonstrate a legitimate business interest that needs protection, and the restrictions should be no more than necessary to safeguard that interest. Consideration, such as employment, typically makes these agreements enforceable.

If the former employee is making false statements about your business, you may have grounds for a defamation lawsuit. To prove defamation, you must show that the employee made an untrue statement about your business, that it was published to a third party, and that your business suffered damages as a result. Slander refers to false oral statements, while libel pertains to written statements.

You might also consider sending a cease and desist letter or pursuing claims for intentional interference with a contract or unfair competition. It's advisable to consult with a local attorney who can evaluate your situation and provide tailored legal advice.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Do non-solicitations hold up in court?

Non-solicitation agreements can be enforceable in court if they are reasonable in scope, duration, and geography. Courts typically evaluate whether the agreement protects a legitimate business interest, such as customer relationships or trade secrets. If the terms are too broad or restrictive, they may be deemed unenforceable. It's important to consult with a legal professional to assess the specific details of your situation and the enforceability of your agreement.

Can I work for a competitor if I signed a non-solicitation?

If you signed a non-solicitation agreement, you may be restricted from soliciting your former employer's customers for a specified period. However, you might still be able to work for a competitor as long as you do not engage in activities that violate the agreement. It's crucial to review the terms of the contract and consult with an attorney to understand your rights and obligations.

What happens to employees when a store goes out of business?

When a store goes out of business, employees may be laid off or terminated. They may be entitled to final paychecks, including any unused vacation or sick leave, depending on state laws. Employees should also check if they qualify for unemployment benefits. Additionally, if the business is sold, some employees may be offered positions with the new owner, but this is not guaranteed.

Is it soliciting if they reach out to you?

If a former employee reaches out to your customers without prompting, it may be considered soliciting, especially if they are trying to sell products or services. However, if customers contact the former employee independently, it may not constitute solicitation. The specific circumstances and any existing agreements will influence this determination. Consulting with a legal professional can help clarify the situation.