BY ROBIN TRUPP
In today’s horse world, you regularly hear the story of the assistant trainer who has struck out on his or her own… by taking valuable customers from the head trainer that showed them the ropes. In the veterinary world, it is the same story when the assistant veterinarian goes out on their own, taking clients with them, after they have worked for years learning the business under the tutelage of the veterinarian.
Often, attorneys are approached after the damage has already been done. There is a solution, but the solution requires legal assistance. A trainer or veterinarian can work with a lawyer to prevent the issue before it happens by creating a non-compete contract with non-disclosure and covenant not to solicit agreements. Typically with cases involving covenants not to compete, the courts first want to be sure that it is not against public health, safety and welfare, and that the covenant is not unreasonable as to time and geographic location. The situation with an assistant trainer or an assistant veterinarian taking customers from their employer calls for a combination of concepts.
The first thing to keep in mind is that any information that would be treated as confidential such as billing records, contact information, etc. collected by the employee is considered to be confidential and not easily attainable. It is appropriate to have an agreement drafted that would include provisions that defines the information that would be considered confidential.
The second part of the equation should be a provision that addresses the non-compete nature of the arrangement. In more general terms, this means that the assistant could not engage in a competing business within a specific geographic and time limitation. Each state has interpretations as to what is reasonable. In the horse industry, the veterinarian clinic or the trainer typically shows in multiple states and should include the specific locations, shows or events frequented annually.
The last component would be a covenant not to solicit, which in plain words means the assistant cannot contact established or potential customers. The provision would require that during the restrictive period he or she would not directly, indirectly, or through any affiliate manner or capacity induce, entice or attempt to induce or entice any customers to leave the services of the employer. Furthermore, the provision should state that the assistant would take no other actions intended to damage or impair any relationship between the employer and the customer or potential customer or client.
One suggestion regarding the verbiage of this provision would be to include any customers or clients that the employer has provided services to within the 12 months prior to the execution of the agreement and any additional customers or clients introduced to the assistant during the term of the agreement. The employer would include a list of the actual and potential customers, consultants and suppliers. There would be a covenant regarding non-disclosure of trade secrets and confidential information and a provision regarding third party information.
When the agreement is drafted, there should also be an enforcement and remedies provision of the agreement. Typically in most states, such an agreement would also require an assignment and binding effect so that the employer could assign these covenants.
Lastly, there should be appropriate language in regard to the choice of law, waiver of jury trial and provision for award of attorney’s fees. These agreements can be very complicated with many stipulations to address based on current state laws. These agreements are well worth the time and the effort because no matter how much you trust the person working with you, things can go wrong down the road. No one wants to be an assistant forever!
Originally published in the October 2014 issue.