What to do about an ex-employee who is competing our business?

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What to do about an ex-employee who is competing our business?

We run a small trucking company that is an LLC. A high ranking employee walked off the job several months ago. He was an independent contractor. Since then he has undermined our business with our vendors and recently talked 4 members (drivers that are also independent contractors) to resign and go to his company and provide service to our vendors. Do we have any recourse?

Asked on November 4, 2013 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Former employees, even high-level ones, can compete with their former employers--including by hiring away other employees or independent contractors--unless:

1) There was a noncompetition or nonsolicitation agreement, which the former employee has breached--if so, you can bring a legal action to enforce the agreement;

2) The former employee has used proprietary business information, such as a customer or client list, which he only had access to by reason of his employment--if so, you may have a legal  claim based on the misappropriation of proprietary information (note: for a claim like this to exist, it must have been clear that this information was confidential and proprietary, and not for distribution);

3) The former employee is defaming you--that is, making untrue statements of fact which damage your reputation (note: true statements or things which are clearly opinions are NOT defamation), in which case you may have a defamation claim;

4) If the former employee is suggesting a connection or affiliation with you that does not exist, you may have a claim for unfair competition; or

5) If the former employer is using some improper pressure (e.g. blackmail, threats, harassment, etc.) to interfere with your business, that may be tortious interference with economic advantage or contracts.

If you feel one or more of the above may be happening, you should consult with an attorney to explore possible legal action.


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