What can you do when you discover that a former employee is hurting your business by working for a competitor? If the employee never signed a noncompetition or nonsolicitation agreement, it may seem there is little you can do. However, the Delaware Court of Chancery’s recent opinion in Wayman Fire Protection v. Premium Fire & Security LLC, C.A. No. 7866-VCP (Del. Ch. March 5, 2014), provides new remedies if that former employee has breached the duties the court explains in this decision.
The Wayman decision is particularly important to employers that in the past have not been able to prevent former employees from hurting their old businesses. Businesses more often than not fail to have their employees sign agreements limiting their ability to join a new firm that is a direct competitor of their employer. Those businesses then find their customers following the employee to his new firm, based on the close customer relationship that employee built up over the years with his old employer’s support. Moreover, the courts have long recognized not only the employee’s right to compete with his former employer, but even that employee’s right to prepare to compete while he is still at his old job. Finally, contributing to this unhappy circumstance, the law has some difficult requirements to meet for a former employer to show its trade secrets have been taken by a departing employee. As a result, employers may lose a suit claiming the theft of trade secrets.
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