It’s common for customers or clients to want to stick with the person who has been handling their account even when that person moves to a different company. But this situation can create serious issues around trade secrets and unfair competition. So, whenever you hire someone from a competitor, give that new employee guidelines to follow—it will save everyone legal headaches.
The benefit of using guidelines for new employees from competitors is twofold: (1) they create positive evidence of your policy of fair competition, and (2) they evidence your intent to avoid use of the former employer’s confidential or trade secret information when the new employee communicates with former customers or clients.
The following sample guidelines apply a conservative approach in outlining how the new employee should deal with former clients or customers:
- Don’t rely on or use in any way any information that you obtained or created while working for your former employer. Be able to show that, in contacting customers or clients, you didn’t need to use any information from your former employer.
- Don’t take a list of customers or clients from your former employer. Instead, develop one immediately on your arrival at the Company using publicly available resources or the Company’s databases.
- The Company will give you text for an announcement of your hiring, which will provide only your new contact information—it won’t ask the customer or client to transfer its account. The announcement will provide your office’s main number, not your direct extension, so that your sales assistant or receptionist can log, in writing, incoming calls from the customers or clients. Keep copies of any announcements you send and proof of when you sent them.
- When customers or clients call you, ask them to put their request to transfer their business to you in writing, and save both a hard copy of their written response and the electronic version. You may not send them any account transfer paperwork unless they request that you send it to them.
- When customers or clients contact you, ask them to provide copies of all relevant documents about their prior activities and describe relevant documents from their own files. Don’t use or rely on copies of documents on that customer or client from your former employer.
- You need permission from your manager before making any announcements by phone. If you get permission, you’ll need to limit the content of your side of the call to telling them you’ve moved and, if they want to discuss doing business with you, how they can reach you. Let the customer or client ask you to assist them in transferring their business.
- If the customer or client tells you they want to transfer their business in that first announcement call, have them reconfirm their request in writing, such as an e-mail.
- If customers or clients talk to you about transferring their accounts but don’t want to confirm the request in writing, send them a confirming e-mail or letter that starts off with language such as: “Thank you so much for calling me (or asking me) about transferring your account(s) to the Company on _ _[date]_ _. I am happy to help you with your request.”
- When you have your initial contact with customers or clients and they inquire about transferring their account, talk about why they should do business with you, not why they should not do business with your former employer. Don’t insult or defame your former employer or any of its employees.
These guidelines can either be given to an employee, with the employee then acknowledging receipt, or made part of the employee’s training by the employee’s manager, or both.
Find much more practical advice on dealing with employee defection and trade secrets protection in CEB’s Drafting Employment Documents for California Employers, chap 7 and CEB’s Advising California Employers and Employees, chap 11. On trade secrets law in California generally, check out CEB’s Trade Secrets Practice in California and the program Trade Secrets, available On Demand.
Other CEBblog™ posts you may find useful:
- Protecting Company Secrets: Checklist for Making a Plan
- Clashing Concepts: Trade Secrets and Social Media Networking
- Checklist to Keep Employee Discipline on a Legal Track
© The Regents of the University of California, 2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.