Employee breached non-compete, non-disclosure, non-solicitation
Hello. I own a hair salon. Business details: S-corp, full-time W-2 employees only, hourly compensation, no independent stylists, clients allow to make requests and schedule appointments, all stylists sign “at will” contracts with non-competition, non-disclosure, non-solicitation clause (5 years after termination). Salon software keeps record of clients’ visits & requests, stylists’ performance, and much more.
Recently, one stylist (Mrs. B) voluntarily terminated her contract and left to work for the competitor. Next day she created a post on the most popular FB page in South Florida with over 22300 followers (majority are existing and potential clients), and made an announcement of her new employment. Over dozen Salon clients responded within an hour that will follow her, 22300 people have seen this post. On the day of the termination, I found Mrs. B’s personal business card in her cart (assuming she was distributing those against the rules). During the following week, only few clients called to request Mrs.B, which is very unusual. Few clients confirmed that Mrs.B contacted them directly to solicit.
Do I have a case?
How should I gather evidence of solicitation?
Assuming I have complete record of her requests, how should I calculate the damages?
Can I win this case without an attorney?
Assuming Mrs.B is a single mother with not enough money to cover the damages; can I demand in court % of her paychecks for x-years?
Asked in Business Law from United States
1. Yes, you have a case against her for non-competition, non-disclosure, non-solicitation as per the clauses mentioned in the Contract she had executed with you (5 years after termination),
2. She has published her joining your competitor for which several clients informed that they will follow her. This is enough evidence of her solicitation by joining your competitor,
3. You shall have to evaluate your loss of revenue for the absence of your earlier clients who are not comiing to you now and then extrapolate it for at least a decade to calculate the total damage,
4. It will not be prudent on your part to pursue the case hyourself with out an attorney who has specialisation in the subject,
5. First let you have the decree of payment of damage after which you can pray for the suitable method to realise it from her.
1. It appears that the cause of action arises at USA . if that is so then only the law of that country will apply and not the Indian Contract Act which reigns supreme over the territory of India only.
2. As per section 27 of the Indian Contract Act any agreement in restraint of trade is not valid
3. However the anti competition agreement in certain cases is valid.
4. Since the dispute arises in USA please consult a local lawyer to get better advice.
1) you cannot restrain your ex employee from
Joining your competitor after leaving your organisation
2) under section 27 of Indian contract act any agreement in restraint of trade is void
3) however your ex employee cannot solicit your clients
4) you can on basis of your non solicitation agreement move court and obtain injunction restraining her from soliciting your clients
5) sue her for damages on basis of loss caused to your business
6) you need to contact a local lawyer
Your case is covered under US Business laws.
Basically it appears that your employee has quit her job with you and joined another concern therefore her responsibilities with your company stands absolved.
Since she left your company, there is no question of she abiding by your company rules forbidding her from not soliciting.
Some clients have told that the asked them to solicit but if she denies that, do you have any evidence other than those poeple who have informed you?, their witness cannot be taken for consideration by court because they are not at all obliged to pass on such information to you even o your request hence the same is not reliable.
Once she is not an employee with you anymore, you have no action against her either directly or indirectly neither you can claim any compensation for the acts done by her outside the employment.
You can attend the court without an attorney too, but you should be familiar with the legal terminologies so that you are able to prosecute the case by yourself.
1. The clients who were contacted by B have to testify in the court, failing which your lawsuit for injunction and compensation will result in dismissal.
2. Do not go without an attorney.
3. The damages are to be calculated by assessing the actual loss of money and the prospective loss of money. If the agreement provides for liquidated damages it will be invoked.
4. You can demand her paychecks if she does not possess money.