Calling on new customers and not established clients
I have worked in residential security sales for a number of years. My question concerning the non-compete I had to sign is this; since my customers with my former company were a one time sale, and they would now be under contract with my former company and since I would not be calling on them, but would be competeing with my former employer for new customers, is the non-compete enforceable? Customers sign a 3 year contract that renews on an annual basis so technically I could call on customers I sold over three years ago, but 1) I would have to time the customer's contract anniversary when they can legally cancel it, which I have no interest in doing and 2), my former company would know when a customer were leaving and could easily see if my security sign were in their yard. It is much easier to go after those homes which don't have a security system.
I read something about my former employer having to show damage from my competition or could they argue the knowledge they gave me will damage them when I compete for new customers?
Answers (1)
Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed the relevant documents and facts, and I do not represent you. Therefore, my discussion below is not a legal opinion, but is informational only. Finally, my discussion applies only to issues to which Pennsylvania or Federal law apply, unless otherwise specified.
That being said, SOME noncompetition agreements may only be enforceable to the extent that it is necessary to protect an employer's customer relationships. The reason this applies only to some noncompetition agreements is that to be enforceable, noncompetition agreements must be necessary to protect an employer's legitimate business interest. Mere competition is not a legitimate business interest (we are a free capitalist society after all); instead, the money invested in training a person new to an industry, or trade secrets, or customer relationships managed by the employee are legitimate business interests. If the only interest to protect is customer relationships, some courts have held that forbidding ANY competition is too broad, and only enforced the agreement to the extent of preventing the former employee from contacting or selling to former customers for a period of time.
I cannot tell from your question whether this would be true in your case. I would suspect that, if the agreement were enforceable at all (which they sometimes are not), it would be enforceable to the extent that you could not solicit your own former customers for a period of time.
If you would like to discuss this matter further, please feel free to contact me at the below address(es) or number.
/Christopher E. Ezold/
Nancy O'Mara Ezold, P.C.
One Belmont Avenue,
Suite 501
Bala Cynwyd, PA 19004
(610) 660-5585
Cezold@Ezoldlaw.com
www.ezoldlaw.com
posted by Christopher Ezold | Feb 24, 2009 09:31 AM [EST]
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