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:
- State: Oregon
Answer:
The answer depends on all the circumstances involved, such as whether there was an employment contract with the person and if it contained a non-compete and/or non-disclosure agreement. In some cases employers make non-solicitation agreements not to lure each other's employees in their own employ.
A business that wants to protect trade secrets, patents, inventions, sales territories, customer lists, and similar confidential business information often find it helpful and desirable to place the terms of the employer-employee relationship in a binding, written employment contract. Noncompete and confidentiality clauses may be used in an agreement with an independent contractor (please see links to forms below).
Confidentiality and non-disclosure agreements are used to impose confidentiality obligations on parties receiving information on materials from disclosing parties which consider such information or material to be confidential. The agreement may contain terms that prohibit the disclosure of confidential information and competition with your business. The employment of the individual is typically considered adequate consideration to make the contract enforceable. If another employer is aware of the agreement and intentionally seeks to interfere with its terms, it may be possible that that employer is liable for damages for intentional interference with a contract.
Confidentiality and non-disclosure agreements are used to impose confidentiality obligations on parties receiving information on materials from disclosing parties which consider such information or material to be confidential. The agreement may contain terms that prohibit the disclosure of confidential information and competition with your business. The employment of the individual is typically considered adequate consideration to make the contract enforceable. If another employer is aware of the agreement and intentionally seeks to interfere with its terms, it may be possible that that employer is liable for damages for intentional interference with a contract.
A court will generally enforce a non-compete agreement if it is reasonable in terms of the restrictions on the employee. It should be limited in time and distance that it covers, so that the employee isn't prevented from earning a living. The agreement may contain terms that prohibit the disclosure of confidential information and solicitation of other employees. The employment of the individual is considered adequate consideration to make the contract enforceable. If another employer is aware of the non-compete agreement and intentionally seeks to interfere with its terms, it may be possible that that employer is liable for damages for intentional interference with a contract.
Courts will enforce non-competition agreements if:
-the employer proves that it has a legitimate business interest to protect by restricting the right to compete against it;
-the restriction on the other party's right to compete is no greater than that necessary to protect the employer's business interest; and
-the covenant not to compete is supported by consideration, meaning that the other party received something in exchange for it.
It may be possible to send a cease and desist letter (see links below), or to bring a lawsuit for defamation. Defamation is an act of communication that causes someone to be shamed, ridiculed, held in contempt, lowered in the estimation of the community, or to lose employment status or earnings or otherwise suffer a damaged reputation. Such defamation is couched in 'defamatory language'. Libel and slander are subcategories of defamation. In order to prove defamation, the plaintiff must prove:
1.; that a statement was made about the plaintiffs reputation, honesty or integrity that is not true;
2.; publication to a third party (i.e., another person hears or reads the statement); and
3.; the plaintiff suffers damages as a result of the statement.
Slander is a form of defamation that consists of making false oral statements about a person which would damage that person's reputation. Typically, damages, such as loss of earnings, demotion, firing, denial of benefits, etc. would need to proven to show harm in the workplace.
Other charges ,may apply, such as intentional interference with contract or unfair competition. We suggest you contact a local attorney who can review all the facts and documents involved.
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.
