Question:
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Mr. Kirschenbaum,
I have been reading your emails for past several months and find them very interesting.
I have an employee that signed a confidentiality agreement and has since left our company and is working for another company. We factory trained him to our product line. He is working for a competing company and has appeared on some of our job sites. He has panel information, codes and such. What can I do to keep him out of our panels? He is aiding his new company to take over our accounts.
Jennifer B
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Answer:
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An x employee who has your business records and uses those records to interfere with your alarm equipment [if leased] or your subscriber's equipment [although the communication software is your property if you use my Monitoring Contract ] may very well be breaking the law. Getting a police officer or District Attorney to take the complaint may be more of a problem because they may see it as a civil dispute.
You could also commence a lawsuit to permanently enjoin your x employee from using or even possessing your business records, and sue for any damages you have suffered. This litigation may be costly and you'd have to consider the economics of that course of action.
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Question:
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I was reading the article in SentryNet where you were giving advice in
regards to Employment Contracts. What is the cost to get a generic EC
that we can use? We can fill in the blanks / as needed.
Thanks,
Debra
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Answer:
The Employment Contract is generic in form and usable for all your alarm / security employees. You fill in the details for each employee. Cost is $200, and well worth it. Without an Employment Contract you are going to have a very difficult time preventing your employee from competing with you, both while on the job and after the employment terminates. Keep in mind that alarm subscribers are usually not considered "trade secrets" and courts may consider them open season to competitors, including your former partners and employees.
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Restrictive Covenants
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Generally restrictive covenants will be enforced to the extent necessary to protect the employer's business. However there are exceptions to this general rule. We have reviewed Ca and Nv and found the following: If any CA or NV attorneys would like to clarify please let us know.
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CA:
Under California law, such a clause is invalid. Section 16600 of the
California Civil Code states: "Except as provided in this chapter, every
contract by which anyone is restrained from engaging in a lawful profession,
trade, or business of any kind is to that extent void." Noncompetition
agreements are invalid under section 16600 in California even if narrowly
drawn, unless they fall within the applicable statutory exceptions of
sections 16601, 16602, or 16602.5. Edwards v. Arthur Andersen LLP, 44 Cal.
4th 937 (2008). Those exceptions relate to dissolution of partnerships and
LLCs, or wholesale transfer of ownership in a company.
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Nv:
Nevada takes a less stringent approach, but even here the above
clause will probably not be enforceable as 5 years is too long to restrain
competition.
Agreement by an employee not to compete with his employer after termination
of the employment is in restraint of trade and will not be enforced unless
its terms are reasonable. Where the public interest is not directly
involved, the test for determining the validity of the covenant as written
is whether it imposes upon the employee a greater restraint than is
reasonably necessary to protect the business and goodwill of the employer. A
restraint of trade is unreasonable, in the absence of statutory
authorization or dominant social or economic justification, if it is greater
than is required for the protection of the person for whose benefit the
restraint is imposed or imposes undue hardship upon the person restricted.
The period of time during which the restraint is to last and the territory
that is included are important factors to be considered in determining the
reasonableness of the agreement. Ellis v. McDaniel, 95 Nev. 455 (Nev. 1979)