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Pestronk Mark
Q: Our resort agency has been swamped with clients we have not heard from since the outbreak. I’d like to hire some experienced agents to meet this inflated demand, but many of those I’ve interviewed say they may have employment contracts that prevent them from working for us. Since I’m definitely afraid of a competitive lawsuit, should I just take what the contracts offer and hire them, or should I ask them to show me the employment contract before I proceed?
A: You should review the contracts and then have your lawyer do it. Most of the time, these contracts don’t actually prohibit the behavior that the prospect thinks they will.
Working for a competitor is strictly prohibited in the employment contract for Travel Consultants. They usually prohibit soliciting or dealing with clients that they have done while working for the competitor. If you only handle your agency’s clients, you don’t prevent the employee from working for you.
Sometimes these terms prohibit the employee from using the “trade secret” that he learned during his employment. However, establishing what constitutes a travel agency trade secret is difficult, and at least one court has ruled that customer names are not trade secrets.
In a few cases, the agreement prohibits travel consultants from working for any other travel consultants in the same geographic region for a certain number of months or years. In an increasing number of states, these contracts are not enforceable, and in the remaining states, they must be reasonable in terms of time, geographic area, and scope so that the employee’s livelihood is not denied.
In another group of cases I found, the restrictions appear in an employee manual or handbook. In most cases, such provisions cannot be applied to the employee as they are not contractually binding.
Finally, in very small cases, the employee never signed the employment contract, so your competitor will have a hard time proving that the employee agreed to be bound by it.
So the lesson here is not to take a promise for the word employment contract. See for yourself and get your attorney’s opinion on scope and applicability. You may be pleasantly surprised.
What can a former employee do if there are no meaningful restrictions in place? The general rule is that a former employee is free to solicit and protect any and all clients. This freedom is central to our system of free enterprise, and courts in every state have recognized the general rule.
Former employees can legally solicit customers in any way they choose, including phone calls, emails, texts, letters or advertisements. For work in progress, such as cruises and tours on deposit, different rules apply, and I’ll explain them in a future column.
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