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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10096
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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How do I protect against retaliation from a Contract

Customer Question

How do I protect against retaliation from a Contract employee I am about to fire - How do I keep him AWAY from accts he previously serviced?
Submitted: 5 months ago.
Category: Finance
Expert:  Lane replied 5 months ago.

If this person WAS an independent contractor and not an employee you MAY not have a lot of recourse.

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A non-compete agreement in either the employment agreement or contract would certainly be the best, ***** ***** practice ... but it may be too late to get a signature there AND the contract may be voidable if he can prove that it was done with the knowledge that you were going to terminate the contract.

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Your contract with the account holders is another possibility (if they are customers buy CONTRACT with you, you certainly have the authority to take legal action against BOTH parties, depending on the nature/contents of those contracts.

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But, so sorry, in the absence of any agreement, once the contractor is not contracting with you, he likely has the right to pursue these same accounts.

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As a real world (again assuming there's nothing contractual there) thought, pre-empting by contacting the accounts, doing what you can to main loyalty, (not knowing the nature of your business, hard to be specific here) ... but being aware and providing non-economic incentives - and in a worst case scenario, be prepared to cut price to compete. etc.

Expert:  Lane replied 5 months ago.

Another though ... not every contract has to be in writing.

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A (or threat of) legal action for breach of contract may apply here.

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Elements of a Contract:

  • Offer.
  • Acceptance.
  • Consideration.
  • Mutuality of Obligation.
  • Competency and Capacity

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Contract only needs to be in writing under the statute of frauds when certain conditions exist (and certain types of contracts) let me get that for you

Expert:  Lane replied 5 months ago.

Traditionally, the statute of frauds requires a signed writing in the following circumstances:

  • Marriage contracts; This provision covers prenuptial agreements.
  • Contracts that cannot be performed within one year. However, contracts of indefinite duration do not fall under the statute of frauds regardless of how long the performance actually takes.
  • Contracts for the transfer of an interest in land. This applies not only to a contract to sell land but also to any other contract in which land or an interest in it is disposed, such as the grant of a mortgage or an easement.
  • Contracts by the will executor to pay a debt of the estate with his own money.
  • Contracts for the sale of goods totaling $500 or more.
  • Contracts in which one party becomes a surety (acts as guarantor) for another party's debt or other obligation.
Expert:  Lane replied 5 months ago.

So it's VERY possible to point out (remind) the individual that you have a contract... depending on the mutual understandings

Expert:  Lane replied 5 months ago.

YOur state MAY allow a nonsolicitation agreement (typically shorter in duration that a non-compete (typically x number of years) signed by existing employees, to stand.

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These agreements state that an employee is not to contact any clients of your company for a certain period after retirement, quitting or dismissal.

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While such agreements do not provide long-term protection from client-poaching, they will buy some time for you to lock your clients down should the person who normally deals with them leave the company.

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(You will not, however, be protected against any of your clients contacting the former employee.)

Expert:  Lane replied 5 months ago.

One final thought;

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If the customers in question were part of an internal company lead or client list, they are protected by the law in most states.

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This means that anyone who worked for the company is unable to use the information provided to them by your company to solicit goods or services. These "trade secrets" as they are called in business are protected by United States law, and no former employee can legally use them to her own benefit.

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Collect data on your customers and create lists that display that data so your clients are better protected from poachers.

Expert:  Lane replied 5 months ago.

See this: https://www.sheehan.com/publications/good-company-newsletter/The-Elusive-Trade-Secret-Known-as-a-Customer-List-.aspx

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

I know it takes an extra step, but JustAnswer won’t credit us for the work until you rate.

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Thank you!

Lane

I have a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice on three continents, since 1986

Expert:  Lane replied 5 months ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

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Let me know…

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Thanks

Lane

Expert:  Lane replied 5 months ago.

Hi, just checking back one more time to see if you saw my answer.

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If so, , and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

I receive no crediting for the work here until you rate

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Thank you!

Lane