You know the routine. You've hired an eager individual willing to come onboard and learn the business. You've taught them, trained them, worked hand in hand and side by side for 2 solid years. Then all of a sudden your employee quits for no apparent reason.
To your disbelief and utter amazement, you realize that you have just wasted the last 2 years of your life. A week or so goes by and you learn that your former employee has started a similar business and there's nothing you can do to stop them. Or is there?
The questions start racing through your mind at light speed. "Why did they just up and quit without notice?" "I thought they liked working here?" "How come I didn't see this coming?" "What could I have done differently?" "Could I have been better prepared for this?"
Then the worst possible thought hits you. "They know all my clients!" "Which clients of mine are they going after?" "Will my customers stick with me or go with the new kid on the block?"
Still confused at their abrupt departure from your employ, you start contacting all of your regular clients. You begin learning that many of them have already been solicited by your former employee. Your fears are confirmed and the pain hits you like a knife in the back.
To add insult to injury the new rates quoted are nearly half what you charge and your clients are wanting some fast answers to your much higher fees. Some thinking that you are gouging them start jumping ship faster than rats on a sinking and burning ship.
Upon examining your options you discover that it's to late. Now you're considering that maybe you should have put together that "Non-Compete"..., "Non-Solicit" ... or "Non-Divulge" contract.
You could of had that individual sign it, before they worked one minute for you. At least that's what some business owners have told you they do. In hind sight that solution now seems fair and reasonable.
Well it's reasonable until you learn that your state, county or city laws no longer allow such binding contracts. Or local laws do not prevent such contracts, but the courts find in favor of your competitor's claims.
Claims that you are preventing them from obtaining gainful employment, that they have trained for, even if it means they have become your newest competitor. Not to mention that your existing clients are not under written contract with you to remain your clients.
If this has happened to you, understand that you are not alone in this. You are but one more in the vicious cycle of abuse, that other businessmen and women have suffered, at the outright betrayal from their so called "Trusted Employees".
So what's a business owner or manager to do? How do you even the playing field without violating the law or swaying a court of law against you? How can you slow down or stop employees from becoming the competition?
With the possibility of "Non-Compete"..., "Non-Solicit" ... or "Non-Divulge" contracts being contested, then the alternative would need to be a contract that cannot be contested in any court.
To protect your interests and assets there is a legal and binding way that will not violate either parties employment rights but provide you legal recourse. Do you want to know what it is?
Before you move forward with any pre-employment contract development stop and consider what you as the employer provide for your hired staff. Items that show your business value has grown, due to your provisions, but does suffer lose when an employee quits.
What types of provisions could build value into your business? Do you provide paid and continued education? Do you provide tools and equipment? How about a company vehicle? Company phone? Company Uniforms? Access to client files and data?
All of these items are but part of your company's assets that you provide and must be well documented that you provide them. Even the education you provide for your employees, whether directly through hands on or indirectly such as a company paid class or seminar. Without these items the employee would be helpless to perform their needed and required tasks.
So how can you protect these assets from going out the door and preventing employees from soliciting your clients?
Would you be surprised if I said, "PROMISSORY NOTE". That's correct. A promise of payment from a promissory note is a legal binding contract and will stand up in court.
The reason it is binding is that the person signing it agrees to pay the predetermined maximum amount allowable by law and then the note is filed at your local courthouse and is on file as a legal binding debt and is payable on demand to the holder of the note.
The quickest way to implement this procedure is to go down to your local office supply store and pick up the notes. Before hiring any individual, inform them that they are required to sign a note and must provide their bank account information.
Once information is gathered, file the paperwork at the courthouse so that you have an official record of the promise to pay. Inform the employee that if he/she quits and does not return the company assets entrusted to them you will call in the note.
Explain that if they quit your employ to start a business and solicit your existing clients you will take them into court to collect on the note. Also you will be contacting their bank of the outstanding note which could put a freeze on their account.
It should give your employees some food for thought. If they do not return company property they risk going into court and having the note called in. If they solicit your customers they risk going into court and having the note called in.
On final point. If the employee wants the note cancelled then they would be required to pay the maximum allowable amount on the note to the note holder. But only if the note holder is willing to cancel the note.
Once paid, the note becomes null and void and is destroyed. It also allows the employee the freedom to become a competitor without legal recourse against them from the former note holder.
Make sure to check with a local attorney to determine what guidelines to follow when implementing a promissory note agreement. Also check with your local small claims court to learn what the maximum allowable amount a note can be issued on an individual. Become familiar with the filing process at your local courthouse.
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About The Author
Woody Quiñones has been selling to the public since the age of 10. With over 36 years of marketing experience he has started several businesses with little or no money. Including his popular website, www.ImpactYourArea.com. Woody is also an Authorized Kaeser & Blair Dealer, a published online writer, a licensed and certified locksmith of 17 years and can be located on numerous online business forums.
woody@impactyourarea.com
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This article was posted on August 25, 2005
