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Wednesday
Jul192000

Don't Fall Victim to New Employee Problem

Just when you thought you had seen it all, local employers are reporting a new problem, valued employees being lured away so that they can sell a different product or service to the customers they have been calling on for their old employer.

This is just a new tactic in the changing business market. The new employer can pay a bonus for your employees because the employees come with your customer list. Since the new employer is trading off of the goodwill your valued employees have built at your expense, they can pay a portion of the money they save on marketing to entice your employees.

Sometimes the new employers don't even have to pay anything out of their pocket. Instead, they dangle the prospect of making $100,000 a year more than their current earnings. The recruits do not realize that few if any people actually reach these earning levels.

DON'T: Don't assume this will not happen to you. The local people who have told me of this problem were surprised that some of their very best employees would be lured away by this tactic. The employees had been very happy with their current situation until they were dazzled by the new employer. There was no indication of any problems. If it can happen to them, it can happen to you.

DO: Do have employees that are in key positions, that have customer contact, that require specialized training or that have access to your business plans, marketing strategies or confidential information sign noncompetition agreements upon initial employment or bona fide advancement.

DO: Add a provision to your noncompetition agreements to provide that upon termination of employment, they cannot solicit any of your customers for ANY reason.

DON'T: Don't assume there is nothing you can do because it is too late to have current employees sign noncompetition agreements or you have former employees that have already started working for someone else.

DO: Do have your current employees sign "Confidentiality Agreements" and "Trade Secret Agreements" to protect your confidential information and important customer relationships. These agreements can be signed by your current employees now even though they have already begun working for you. The agreements may have the ancillary benefit of discouraging valued employees from being lured away by others that want to target your customers.

DO: Do develop a standard practice of sending letters to terminating employees that state what they cannot do under your contractual agreements and under Oregon law. Even if you do not have written noncompetition, confidentiality or trade secret agreements, you still have some common law protections established by the courts. Let your terminating employees know the prohibitions to which they are subject.

DO: Do send letters to any former employees that you believe may be calling on your customers. Let them know the prohibitions to which they are subject and the action you will take if they violate those prohibitions.

WE CAN HELP: We can help you draft effective, enforceable noncompetition agreements. We have many ideas for confidentiality and trade secret agreements. We can help you create an appropriate letter for terminating employees that you can use as a form. If you believe a former employee is calling on your customers, we can also help you with the steps you need to take.

REMEMBER: The action you take against a former employee, or lack of action, sends a message to your current employees. If they see someone being lured away and you do not take action, what will prevent them from doing the same thing?

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