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.

Changing Services

A great quote from Giorgio Armani over at Young Entrepreneur:

Remain true to yourself and your philosophy. Changing in the face of adversity will in fact diminish your credibility with your customers.

When I think about that, I remember the numerious entrepreneurs that I’ve known, many who start off in network marketing, MLM type businsesses. They go at it for a while and then when adversity faces them — such as three months past due and staring down the eviction path, they jump ship.

Now I’m not advocating that you stick with a sinking ship. But at the same time, people jump from product-to-product, venture-to-venture, so quickly and frequently that they loose credibility with their business partners. I can think of a networking group I belonged to a while back, and this wonderful lady changed her profession three times within a period of one year. Do you think I have any faith in her ability as a business person. Would I send clients her way? How would I or anyone be certain that she would be around to continue to service my company?

Now, through my businesses, we have continued to work on the cutting edge of professional services, yet always staying within our core compentancy, as well as continuing to strongly serve our existing clients – and never dropping a service — rather we keep expanding and plus-ing our service; again, all within the very narrow relam of our core compentancy.

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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