Non-competition agreements have been standard for many trades throughout the capitalistic history. However, at some point California, being an at will employment state ceased to recognize these documents as binding. The logic is that an employer should no be able to restrict a person from taking a traded they know and using their skills at another company. Equally this applies to employees starting their own firms. How many of us have been apprenticed by another, perhaps even working as an employee at their firm.

While the business logic for a NCA is apparent,  California does not enforce these agreements.

So what is an employer of contract services to do to prevent employees from stealing clients from their former employer? There are a couple of things:

First thing is to make your clients a raving fan of your company, it’s model and brand. Your company brand should be disassociated from individuals likes – yes, they should love your people and have a great working relationship with them; however they should love what the company brings to them even more. Beyond simply avoiding problems with former employees, or even simply because of great customer service; this can make it much easier to exit your company (sell, merge, etc) when the time comes.

Next, market your customers with the value of a larger company (or simply larger than an independent contractor) – such as greater stability, higher availability, diverse skill sets, etc.

Third, remind your staff of the high costs of doing business, the value you provide to them: job and income stability, benefits, holiday and vacations (even if unpaid, they have a job to come back to – try taking a 2 week vacation from your contract clients without problems), administrative and business services — they can simply focus on their trade instead of the business end of things.

Finally, you can bind your clients in their contracts to not recruit, hire or retain your employees, former employees or contractors during the duration of their contract with you, and perhaps 1 year thereafter. This can simply be placed in line with your regular contract terms, but you also want to include two important elements: (1) a stated minimum monetary amount (we placed it at 50% of the annual salary of their regular technician) and (2) a provision for you to receive reasonable attorney fees. Most clients will understand this in the onset of an agreement. You can also gently remind your employees about it – in a non-threatening way.

Now failing all of these, you can likely litigate with your former employees because they’ll likely violate terms of their non-disclosure agreements. But proving this and determining a monetary damages could be difficult.

Realize that this does not prevent this from happening, but rather it is a big deterrent. You also still need to collect from them, which will take much longer than you would expect. With major clients this could be devastating to a company. What would happen if your employee was able to woo your largest client away? How would this affect your business if you could not collect any monetary damages from anyone for 24 months?

We recommend being proactive by making sure that your clients are happy and fiercely loyal. Second to that is having your contacts reviewed by a business trial lawyer.


This is not intended to be specific legal advise, but general information and a guide to help you work with your professional team including lawyers to provide the correct amount of protection for your company. This is part of a 4 week series which came out of a luncheon discussion with several close business associates of mine.

Unsolicited Resumes

A business associate of mine was describing a new leveraging of the Linked In technology. The concept is simple, use Linked-In to discover the name of key people: recruiter, directors, principles, etc., for the company you’d like to work for and directly submit your resume to them via e-mail or postal mail. The rationale behind this is that often when submitting your resume through the proper channels on the corporate website, or via Monster/Dice/etc your resume may be automatically filtered out because of some negative keyword. However, by directly submitting a resume, it will increase the likelihood of it being read by a human and therefore you have a higher chance of being contacted.

However, on the other end of the spectrum, I cannot count the number of times I’ve received a unsolicited resume, for a position we don’t have or have then need for. It frequently makes me wonder how much they really want to work for my company, instead of just “some” company.

I guess the reason for the offense is my perspective of the hiring process:

1) You should be looking for a job position which specifically matches your skill set;

2) You should be looking for a company which matches your work culture/ethic;

3) You should want to work specifically for our company for a specific reason. If it came down simply to businesses (title, pay, etc., all the same) I want you to have a reason to want us.

Sending out an unsolicited resume says that you’re willing to take anything from anyone – that it really simply comes down to price. But the reality is most people leave their jobs for reasons other than money. Sure, we all would like to get paid more. But frequently there are other underlying problems. If pay is what will make you choose me, then you might simply leave when it suits you.

What are your thoughts? How have you received resumes lately?

The counter offer

A growing trend is the concept of a Counter Offer – those being a special offer provided to an employee, which tendered their resignation to the company, in an attempt to avoid loosing them. The reasons appear straight forward – you know you have a good employee who knows the company and ‘system’ and it is a lot of work to interview and train a new employee. However, here are a few good reasons not to offer a “counter offer”

  1. There is likely a reason they are leaving the company, if they believe they are entitled to more pay, then why was it you didn’t provide a raise sooner?
  2. Think on how this affect morale of the fellow employees? (He is just staying for the money.)
  3. 80% of employees which accept a counter still end up leaving after 1 year.
  4. Money is never the solution to problems, so there are underlying issues which may or may not be addressable.
  5. How do you think their choice to leave the company will affect you view of them, both today and during the next performance or annual review?
  6. If you had to lay someone off, how much more likely will it be this person?

So what have you really kept or bought? Perhaps a bit more time, which may be worth it – to find a replacement. But otherwise, there is little value in thinking you can keep them around for a long time.

Corrective Action

It is amazing how many people are interested in self improvement and the vast number of books that you can find at a local bookstore, yet in business it is surprisingly hard to find employees who are interested in improving themselves. Yes, they would all say they are open to improvement, and many may read books, attend seminars or take other steps towards change… Yet, when change comes to their doorsteps, they resist it. Today I was talking to one of our customers about the process of disciplinary action — corrective action. When an employee goes beyond their boundaries, certain action is required in order to bring the situation into it’s proper place.

Another example would be a business meeting I had with a “membership officer” of a local networking group – one of their policies is attendance, very strict. And you can be removed from the group for attendance issues. However, many groups will give a little too much grace in this area. In order to keep this attendance policy, not only should the warning notices actually be sent out, but the members dismissed if they fail to correct their actions.

Everyone should be interested in correcting their actions. There is little need for a reason or excuse, simply take the steps needed and move forward – correct the action – make yourself better. Don’t sit in apathy, and become disgruntled, or have your pride hurt simply because it was discovered that you’re not the shining example of perfection that you thought that everyone perceived you to be. Wake up! You’re not perfect, and we all know that – and we also know that we, ourselves, are not perfect. So, where do we go? Humbly, take whatever steps it takes to move forwards towards a better you — as an employee, employer or friend.


The adventures begin when a person moves from a sole proprietorship to a company with multiple employees. The adage of “slow-to-hire, quick-to-fire” somehow becomes muddled and reversed! Making the first few employee choices very quick, and then hanging on to them for far, far too long. Until there is a breaking point, damage is done, and relationships are broken… both between employer, employee – along with collateral damage with other employees and customer/vendors.

Recently we have been faced with having take measures to let an employee know that his behaviour was getting out of line. Instead of simply blowing the company off, they became abusive and attack the company and it’s management. Not surprising, certainly. Worse yet, we really had no idea of just how well we were taking care of our employee’s compensation and benefits until this event forced is to look into it. And while sitting in the office with our HR Attorney, we recounted the same story … “how could they do that when we treat them so well…like family?” However, they tell us that is what they hear weekly. The employer who feels that they bent over backwards for an employee who simply back stabbed the employer over something menial. And typically it comes down to money. Oh, there are other words and feeling exchanged, but frequently money is the bottom line.

Going forward, a bit slower to hire, and much faster to get rid of potential dead weight!

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