Lawyers: Legality of hiring away a competitor and then firing them.

[cstreit]

All - what, if any legal implications are there if an employer hires away key employees from a competitor - asks them for a contact list - and then lays them off a few months later?

In this case the employee is someone I know - so more interested in helping him than the company he was hired away from.

[unclebilly]

That contact list is likely not allowed to be shared per his NDA / CA with his original employer. He will likely be in hot water for this too if this gets reported to his previous employer.

[flatbutt]

Non compete clauses are difficult to enforce but Non disclosures are fairly tight.The employee could get in much hot water for the violation but I'd think that an employer doing such an act would find plenty of wrongful termination suits.

[jhynesrockmtn]

I'm no lawyer but have worked in industries that have non compete agreements and once passed the business law portion of the CPA exam, in 1989 :-)

I would say typically no implications for the employer unless the company your friend was hired away from could prove they planned the whole thing in terms of hiring, then firing a key employee just to get their contact list. If your friend the employee violated an NDA or non compete, possibly implications for them.

If your friend was not violating anything but could prove his now former employer planned this out, and he was fired for no documented reason he may have some recourse, especially if he is in a protected class (age, sex, minority, disability, etc.)

In today's world with everything in the public domain and accessible, contact or mailing lists become less and less important.

[drcoastline]

Need more information to help. In spite of the assumptions there was an employment contract , non compete, non disclosure in some of the posts you don't say so.

So lacking any of that I am not sure there is any recourse by the Employee against the new employer. The original employer against the employee. I don't think the original employer has any recourse against the new employer unless they can prove theft.

Again need more information on the situation/relatonships.

[drcoastline]

Being in the insurance business we have client lists, expiration dates, intellectual property, trade secretes, trade marks, etc to protect.

So while our employment contracts and agent agreements do have a non compete clause we have an action upon termination clause which includes non solicitation, non disclosure, ownership rights of lists, intellectual property, trade secretes, marks, etc.

[cstreit]

Let me clarify, no contact list was shared - but it was requested.

THere's not blatant wrongdoing - but why promise the moon to the top employees of your competitors to woo them, never deliver, and then can then 3-5 months later? I loves me a good conspiracy and it seems like they promised a lot and then set them up for failure after they didnt' spill the goods.

[drcoastline]

Because he wooed the top employees away that's why. The competition doesn't have them and he doesn't want them. Watch the movie the Ides of March with Ryan Gosling.

[Rick Lee]

I really wonder how a rolodex can be covered by anything in the day of LinkedIn. Any person or company on that rolodex can be found on LinkedIn. Maybe their phone number or email can't, but anyone with some skills can dig that up too. I would think specific contracts and info therein would be hard to defend. But contacts and their info? Anyone can find that if they know what they're doing.

[drcoastline]

Originally Posted by Rick Lee

I really wonder how a rolodex can be covered by anything in the day of LinkedIn. Any person or company on that rolodex can be found on LinkedIn. Maybe their phone number or email can't, but anyone with some skills can dig that up too. I would think specific contracts and info therein would be hard to defend. But contacts and their info? Anyone can find that if they know what they're doing.

Yes but that takes time and money. To have a competitors client list, perhaps hundreds or thousands of names, product(s) they buy and possibly pricing is extremely valuable. A fresh qualified prospect list is very expensive.

[Rick Lee]

Plenty of companies advertise their client list on their website. Sure, contract and revenue details aren't there, but this stuff is not hard to find for seasoned salespeople. I used to get my leads by using a highlighter while reading the Wash. Post on the Metro on the way into the office. Once on my computer, I looked up contact people, which ofter showed which competitor they were using. Easy stuff.

I am a lawyer, but not an expert in employment law per se. That said, I was involved a few matters like this. So, fwiw:

Employment laws vary by state, as does contract law, as does common law. Illinois is an at-will state, which means that an employer can fire an employee for any reason or for no reason, unless there is an employment contract between the company and the employee. Federal law covers retaliatory termination for certain things but otherwise, federal law is inapplicable. I think, but am too lazy to look up. Sue me.

So, under the facts, your pal was hired away by a guy who could fire him, and the others who came over, for any reason or no reason, unless he had employment contracts with them, which is unusual in anything but C-suite types. I once got canned from a very nice VP position because the EVP I reported to just plain didn't like me. (Hard to imagine why.) Motivated, I did a brush up on the law and discovered that, at least in Washington State, employees pretty much go through a flow chart where no matter which things you choose you always end up in the box at the bottom that says "you're screwed!" I bet Illinois is much the same way for employees. So your pal is kind of out of luck legally as to recourse against the raider. Unless there is some sort of implied covenant of good faith and fair dealing in Illinois, which I doubt but don't know, and am too lazy . . . sue me again.

So, as often is the case, that which is unethical (raiding) is pretty much legal. Tie generally goes to the employer in a capitalist society. Suited me fine when I became an employer, when I had to fire entitled millennials from time to time.

Hindsight is 20-20, but you gotta wonder if a guy who was willing to execute such a raid could be expected to treat the folks he raided ethically?

[drcoastline]

Originally Posted by Rick Lee

Plenty of companies advertise their client list on their website. Sure, contract and revenue details aren't there, but this stuff is not hard to find for seasoned salespeople. I used to get my leads by using a highlighter while reading the Wash. Post on the Metro on the way into the office. Once on my computer, I looked up contact people, which ofter showed which competitor they were using. Easy stuff.

True but again you are finding leads a few at a time then calling on them to try and close. That is a long slow process. So you would rather sit on the Metro highlighting a half dozen leads look them up, cold call, set an appointment, meet the buyer, prepare a proposal, go back, pitch the pricing and hopefully close one because the prospect is going to go back to the other guy and say here's what Rick will do for me what can you do?

vs.

Read the Post for it's award winning journalism and unbiased reporting, walk into your office, where the salesman of the potential leads is standing at your desk and says Rick here's my client list for today. Name, phone number, email, product they buy, when they buy it, how much they pay and then he/she says to you, I will call the client and tell them to buy from you?

In the original post above what I suspect occurred. was the New employer hired the employee away from the original employer with the understanding the employee would bring their client list. It seems to me based on Cstreit's second post the employee didn't bring a list or didn't solicit the customers. Now they are just another mouth to feed. So he let then go.

[McLovin]

Your post suggests that the contact list is confidential information.

If that is the case, then yes, what the new employer did is actionable.

If the employee could prove that he was hired for the purpose of improperly obtaining the confidential client list, and he was fired because he refused to provide it, he would have numerous causes of action against the employer.

[Rick Lee]

Plenty of job listings out there say "rolodex or existing book of business required." It's very common. Sure, I'd love to have someone hand me a huge list of hot leads with all the inside info I'd ever want on them. But anyone who will do that to a former employer will probably do it to a future employer too. Unless those customers are super loyal to that salesperson rather than his/her former employer, they're not going to just jump ship. And they may be stuck in a contract for several more years. I guess it sort of depends on whether the salesperson is an independent contractor with his own book or going to be W2, in which case loyalty to the employer is expected.

[vash]

brutal.

Originally Posted by McLovin

Your post suggests that the contact list is confidential information.

If that is the case, then yes, what the new employer did is actionable.

If the employee could prove that he was hired for the purpose of improperly obtaining the confidential client list, and he was fired because he refused to provide it, he would have numerous causes of action against the employer.

The OP said the list was asked for, but not delivered. The fact that the new employer contacted everyone without it suggests it was not confidential--he got the info elsewhere. I don't see a cause of action by the employees.

[drcoastline]

Originally Posted by McLovin

Your post suggests that the contact list is confidential information.

If that is the case, then yes, what the new employer did is actionable.

If the employee could prove that he was hired for the purpose of improperly obtaining the confidential client list, and he was fired because he refused to provide it, he would have numerous causes of action against the employer.

Neither of the OP's posts indicates one way or another that the list was confidential. That's why it is difficult to state one way or the other if there is any recourse.

[cstreit]

Seems to me that there's a least a discussion for hiring under false/fraudulent pretences , though this might be difficult to prove.