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Can my former employer sue me if I didn't sign a non-compete or non-solicitation contract/agreement?

New York, NY |

I recently quit my job and started a business with a friend in a field similar to my former job. Whereas my old job had a storefront, I do not. I don't even have an office and I have no start-up capital or any real inventory at present.

My boss found out through acquaintances that I was starting a similar business, and he called me and said that I had broken the law by contacting clients. I did, in fact, contact clients (that I had found myself) to say I was leaving my job. However, I did not sign a non-compete or non-solicitation agreement/contract; but I did sign a confidentiality agreement which addresses trade secrets.

Note that the clients contact info is readily available online and in trade publications.

How do NYC courts rule in such cases as mine?

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Attorney answers 5

Posted

Based on the information that you have provided it does not appear like your old employer has any right to restrict your new business. If you did not sign a non-compete or confidentiality agreement, he/she/it is out of luck. Keep in mind that even if there is some type of an agreement, the only way he/she/it can stop you is by taking you to court and getting an injunction. In general New York Courts are reluctant to enforce restrictions on a person's ability to earn a living--even when there is an agreement, so I think you are going to be fine.

Good luck,

Ronald Joseph Kim

Ronald Joseph Kim

Posted

Sorry missed the part about a confidentiality agreement. Generally speaking these are only enforceable if the information that it covers is either a trade secret or proprietary. A "customer list" is not per se proprietary unless your former employer can demonstrate that the only way you would know about these potential customers is via your employer.

Asker

Posted

Sure. Which would probably be hard to demonstrate without evidence that it was either known or unknown prior to employment, right?

Posted

It's impossible to say how a court will rule in a particular case or set of facts. That said, you may be right with respect to the no-compete clause. However, the confidentiality agreement might raise some issues. You should consult with a competent lawyer.

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Posted

Mr. Kim is correct. However, your former employer may try to show that you breached the duty of loyalty by contacting its clients while still working there, in an effort to solicit future business.

The information provided above is for general purposes only. It does not constitute legal advice or create an attorney-client relationship. Seek competent legal representation, because the facts of each case are different.

Asker

Posted

Thanks, Alix. I appreciate it. I didn't contact employees before leaving, though—if that information is useful. Joe

Alix R. Rubin

Alix R. Rubin

Posted

Then you should be fine.

Posted

You skillfully did not solicit while you were still at your former job. Bravo. This would have given rise to the likely violation of the good faith provisions in the Business Corporation Law which punish looters of customers or clients with promises of new business at your start-up. The fact that the names are public is not really relevant to your issues. You mention a "similar" business and issues regarding a storefront and inventory. These are not meaningful issues without further context in such a case and without my further analysis of what "similar" means in an objective sense, and whether a case could be made that your prior job endowed you with trade secrets belonging to him. If I were retained by him that is how I would proceed. (By the way, this is how I practice: to put myself in the shoes of my adversary and look at your cases weaknesses.) Another attorney who commented on your predicament seems, I think, too sanguine, regarding the possibility of litigation; while, of course, the personalities here would be a very strong factor in my analysis. Does he want to kill?
I wish you well, and, of course, always answer these questions as hypothetical situations, so that you understand that I am not actually (especially in this public forum) acting as your counselor. Call me anytime.

UNTIL AND UNLESS A RETENTION AGREEMENT IS EXECUTED AND DELIVERED BY BOTH PARTIES TO THIS EMAIL, NO ATTORNEY-CLIENT RELATIONSHIP IS ESTABLISHED BETWEEN ME AND THE PERSON OR PERSONS POSING THESE QUESTIONS.

Posted

If the identity of the customers are available through publicly available sources, there is strong argument that you should not be restricted from doing business with them, post-employment. I suggest you consult an attorney, however, to review whatever agreement(s) you signed with your former employer and your situation in general.

PLEASE NOTE: This response is for general purposes only and does not establish an attorney-client relationship, nor is it legal advice. Please consult an attorney for legal advice particular to the circumstances of your situation.

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