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Brandon, Esq.
Brandon, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 1652
Experience:  Has received a certificate of recognition from the California State Senate for his outstanding legal service.
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I operate a small Day Spa in No. California and I use contractors

Resolved Question:

I operate a small Day Spa in No. California and I use 'contractors' for massage and skincare services. Upon accepting the contract position I have them sign a Indpenden Contractor Agreement. In this agreement is a paragraph specific to 'compete' and it reads as follows:

COVENANT NOT TO COMPETE
(a) Contractor agrees not to compete with BMAS in the practice of Skincare, Makeup and Body Treatments and Massage while working for BMAS and for a period of “5 years” after termination of this contract within a radius of 25 miles of Belleza Makeup Artistry & Skincare,XXXXX Ste. C, Santa Clara, CA 95050.

(b) For purposes of this covenant not to compete, competition is defined as soliciting or
accepting employment by, or rendering professional services to, any person or
organization that is or was a client of Belleza Makeup Artistry & Skincare during the term of Contractor’s work with BMAS.

Recently, one of my massage contractors terminated the contract to move on to another location. Some of my clients who have received massages from her in the past at my establishment have come in and mentioned that they have spoken with her. It appears that she has called several of my existing clients, my guess to solicit them for services. She had access to my online booking database in order to 'rebook' clients for appointments, she also had access to their hardcopy files in my office as I require them to keep and document thorough notes on all clients. I believe she went through clients records and documented their contact information prior to her leaving or giving me notice to leave.

Can I send her a letter with a copy of the contract highlighting the 'COVENANT NOT TO COMPETE' as a reminder and demand she seize the contacts or that I will be forced to take legal action against her? This action would be more of a 'scare tactic' to hopefully get her to stop contacting my clients.

I look forward to a response.

Thank you,
~Lori
Submitted: 10 months ago.
Category: California Employment Law
Expert:  Brandon, Esq. replied 10 months ago.

Employment-LawExpert :

Hi Lori, thank you for your question today.

Employment-LawExpert :

Are you online with me?

Employment-LawExpert :

First, let me say that you are absolutely able to send a scare letter to her, and more often than not that does the trick. That being said, however, if she consults an attorney that letter will hold no bearing. In California restraints on trade, aka non-compete agreements, are illegal and void for employees and independent contractors. That being said, an employee can be prohibited from using trade secrets and confidential information of their employers. Courts have often held that this exemption applies to customer lists used to solicit customers. However, the contract language has to specifically state that an an employee cannot use confidential company information to solicit customers post-employment.

Employment-LawExpert :

Is there any other language in the non-compete you had them sign that specifically references client lists?

Employment-LawExpert :

Welcome to the chat

Customer:

I have a Policy Handbook where I think I may have covered this...let me check

Customer:

Here is what I have written in the Policy Handbook and each Contractor is required to read it, keep and turn in a signed form stating that they have received and understand it.

Customer:

Conflict of Interest


Belleza Makeup Artistry & Skincare expects its employees and contractors to exercise the utmost good faith in the performance of their duties.


 


Employees/Contractors have the obligation to avoid any businessinterest or relationship, financial or otherwise that might adversely affect or influence their judgment in the performance of any Belleza Makeup Artistry & Skincare services or which might tend to impair public confidence inBelleza Makeup Artistry & Skincare.


 


Employees/Contractors are personally responsible to avoid the improper use of Belleza Makeup Artistry & Skincare property and/or equipment that could result in questionable or illegal payments, gifts, or offers of anything of value.


 


Violation of this policy may be subject to possible legal action.


 



Confidentiality of Information


It is vital that Belleza Makeup Artistry & Skincare maintains the confidentiality of all business operations, activities, and affairs as well as its client list. If, during employment, you acquire confidential or proprietary information about Belleza Makeup Artistry & Skincare and its clients, such information must be handled in strict confidence. Do not discuss any Belleza Makeup Artistry & Skincare affairs with outsiders. Remember that you are also responsible for the internal security of such information.


 


The protection of confidential business information and trade secrets is vital to the interests and the success of Belleza Makeup Artistry & Skincare and its clients. Some examples of confidential information include:


 


1. Client lists


2. Compensation data


3. New material research


4. Financial & sales information


5. Pending projects and proposals


6. Business & marketing strategies


7. Educational materials and processes


 


Employees/Contractors will not seek to benefit personally nor permit others to benefit through the use of confidential information obtained as a result of their work assignment. No employee or contractor may use or disclose any confidential information, directly or indirectly, without specific written authorization from Belleza Makeup Artistry & Skincare Owner either during your employment with Belleza Makeup Artistry & Skincare or after your employment terminates.


 


If a violation occurs, Belleza Makeup Artistry & Skincare may be held legally responsible. Violation of this policy may be subject to possible legal action.

Employment-LawExpert :

Please give me a moment to read this

Customer:

Sure.

Employment-LawExpert :

Okay, this is the section which may be able to help you "Employees/Contractors will not seek to benefit personally nor permit others to benefit through the use of confidential information obtained as a result of their work assignment. No employee or contractor may use or disclose any confidential information, directly or indirectly, without specific written authorization from Belleza Makeup Artistry & Skincare Owner either during your employment with Belleza Makeup Artistry & Skincare or after your employment terminates." Every other covenant above that would be deemed unenforceable.

Employment-LawExpert :

You would argue that they are misappropriating trade secrets and any further use will result in immediate legal action.

Employment-LawExpert :

You could use "The Retirement Group v. Galante (2009) 176 Cal.App.4th 1226" to get a preliminary injunction prohibiting them from soliciting any customers, or using customer lists.

Employment-LawExpert :

The only caveat to this would be that under Business & Professions Code § 16600 they are allowed to solicit customers, as any competitor, as long as non-confidential information was used. But of course, this would give you grounds to sue them if needed, and the cost of defense for such a suit would likely cause them to pack up and do something else.

Employment-LawExpert :

Does that make sense?

Customer:

Yes, it does. This particular person doesn't have much, literally. So I think that the letter would do the trick.

Employment-LawExpert :

I am glad that I can get you pointed in the right direction. Does this fully answer your question today?

Employment-LawExpert :

Please do not hesitate to ask any follow up questions you may have if you need clarification on anything I have said.

Customer:

Do you recommend I send copies of the handbook pages and the contract along with the letter or just include the paragraphs in the letter?

Employment-LawExpert :

That is up to you. As an attorney I would specifically reference the language in the letter itself. Do not assume that they would look through anything they are not forced to directly look at.

Employment-LawExpert :

If your company has an attorney, having it come on attorney letterhead always holds a significant amount of weight

Customer:

I don't have an attorney at this time.

Customer:

Am I able to print out this chat?

Employment-LawExpert :

Once you provide a positive rating, then this question will become part of your account and a print button will appear on your page.

Employment-LawExpert :

Then you can print it, copy it, or do anything else you would like with it.

Customer:

ok. are you available to type up a letter for me and if so what is the fee?

Employment-LawExpert :

Unfortunately I am not able to do that. It is strictly against the terms of service of the site to create such an attorney client relationship. However, if you go to www.Martindale.com you will find a number of qualified attorneys who will be able to help you in this matter.

Customer:

Thank you for your advice and information. You have fully answered my question.

Employment-LawExpert :

I am glad that I could get you pointed in the right direction.

Employment-LawExpert :

If you ever need to ask for me specifically in the future, please feel free to do so here:

Employment-LawExpert :

Have a wonderful rest of your day.

Customer:

thanks you too!

Brandon, Esq., Lawyer
Satisfied Customers: 1652
Experience: Has received a certificate of recognition from the California State Senate for his outstanding legal service.
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