Post-employment litigation

[Mammoth]

Hello Fastlaners,

I just found out that the owner of the company that I work for is suing a former manager for starting his business while he was still working here.

I know that every non-compete is different and that laws in Canada vs. USA are different, but does anyone have experiences of this happening to them or to someone that they know?

I haven't incorporated my business yet, but maybe this is something I should take into consideration before I do.

Any input or advice is welcomed.

 

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[Lucky Lu]

Well there is a difference between a non compete clause or a specific agreement to limit the ability of the former employee to engage in activities that are in direct competition or in the same field as the former employer, and the general legal limitation that prevents an employee or associate to utilize confidential information or trade secrets, formulas or know how in order to disloyally compete with the previous company he worked for.

Also is generally consider on every legislation as an unfair commercial practice to poach clients or engage in detrimental communications regarding the former employer or his company on order to gain new clients or make the previous clients switch.

Without knowing the details on the case it is nos possible to make an assessment and really give an opinion regarding your particular situation but feel free to explain.

The validity of the NCC varies from case to case and can depend on state law, on how restrictive the agreement is in terms of time and the radius of the region, and on what the employer construes as competition.

Non-compete agreements usually are considered legally binding as long as they have reasonable limitations. That refers to time frames, geographical boundaries and personal or commercial reasonable behavior.

 

[FierceRacoon]

Consider this,
did it hurt the owner of your company? That is, can the owner demonstrate losses or unrealized profits due to this unfair competition? Can those losses be quantified?

Regarding incorporating your business, you should definitely study your situation and the terms of your employment, considering your line of work, to ensure that your employer does not own e.g. some intellectual property that you produce for your own business.

 

[c_morris]

Is your business within the same domain as the company you work for?
i.e. Your company provides a product/service and your business will develop a competing product/service or anything that could potentially be a benefit to your employer.

Found this on a Canadian law firm's website regarding copyrights and intellectual property:

"Copyright – works created by an employee in the course of employment
Pursuant to section 13(3) of the Copyright Act, R.S., 1985, c. C-42, where the author is an employee, creates an original work in the course of employment and in the absence of any
agreement to the contrary, the employer shall be the first owner of copyright.

If employers wish to make it clear that they own the rights to the works created by employees on a worldwide basis, employers should nonetheless address copyright in their employment contracts. While ownership of the copyright, by law, remains with the employer, addressing the question of rights in an employment contract eliminates any doubt in the eyes of employees about who owns the rights to works created in the course of employment."

 

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[Mammoth]

Thanks for the replies.

I've consulted with a lawyer, and he's confident based on my employment contract that as long as my business doesn't take my time away from work, then there should be no conflict.

He did advise me to at least let them know so that we're on the same page and I'm not hiding it from them.

And it wouldn't be a competing industry at all, something completely unrelated.

I think I'm in the clear!

 

[aeden]

I started my business before I was hired as a full-time employee at a company. I did not sign my employment contract until the specific elements of my business were written into the contract as an exclusion in order to ensure my IP was separate from theirs.

Given you are already employed, get your contract updated with wording for exclusion of your IP (which it sounds like what your lawyer is advising). When you do finally leave your current position, so not take any of their customer details with you. I know it sounds obvious but if you treat your current employer with respect, and they in turn respect you and the work you do, then you should be able to create a win-win situation and everyone should walk away happy.