If you have the opportunity to explore a career change, or are thinking about starting your own business, the first step before making any definitive plans is to review your current Employment Agreement and documents that you have signed with your employer.
Primary pitfalls that departing employees may encounter are covenants not to compete, agreements not to solicit customers and/or clients, and misappropriation of trade secrets. An experienced business and employment attorney can help you navigate these agreements and documents, while protecting and advocating for your future independent professional and business relationships.
Interestingly, covenants not to compete are found by courts to be both enforceable and unenforceable on a fairly regular basis. Even the best covenants can have errors, which makes consulting with an experienced attorney all the more important. The laws are constantly evolving to maintain a balance that protects the employer, while not totally prohibiting the employee from working. Each agreement should be carefully analyzed so that you know what, if any, new business or activity may be prohibited.
Similarly, agreements not to solicit customers are analyzed in the same fashion as covenants not to compete. These agreements tend to be much easier to enforce if written properly because the courts have recognized the importance of protecting employers’ customers and clients.
On the other hand, trade secrets can be heavily disputed. What is a trade secret? Under the North Carolina Trade Secrets Protection Act, a trade secret, “means business or technical information
including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that: (a) Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and (b): Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
In court, all parts and descriptions in the definition of trade secrets are regularly disputed. Questions may include:
- What is the information?
- Is it commonly known by competitors and used by others?
- Did employees and customers/clients sign non-disclosure agreements to keep these secrets?
The easiest way to avoid getting sued for misappropriating trade secrets is to be transparent and honest when departing from one job and entering a new one. A good rule of thumb is to never take anything from your old job to your new one. Employers legally can, and will, easily be able to track any downloading and/or forwarding of proprietary business information.
If you find yourself changing careers and facing difficultly, or you want to protect your business as an employer, please seek the advice of one of our business attorneys.